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Government to Extend Credit Card Fee Waiver and Cap Interest Rates

While the personal loan interest percentage varies from 11 to 18 per cent across banks, credit cards invite much higher rates.

Published: 18th February 2017 10:51 PM  |   Last Updated: 19th February 2017 09:52 AM   |  A+A-

NEW DELHI: Banks were making hay with credit cards before demonetisation, when the government waived transaction charges on spends up to `2,500 until March 31. Now, the deadline will be extended by a year. The government also plans to cap interest charges on credit cards to promote their wider usage for a cashless India.
In line with the recommendations of the CMs’ panel on the promotion of a cashless economy, the NITI Aayog is in an advanced stage to firm up plans to give a further boost for digital transactions, said sources.

In line with the recommendations of the CMs’ panel headed by Andhra Pradesh Chief Minister N Chandrababu Naidu, on the promotion of a cashless economy, the NITI Aayog is in an advanced stage to firm up plans to give a boost for digital transactions, said sources.


“The government led discussions with various stakeholders, including the Reserve Bank of India, to extend the exemption date. The Ministry of Finance will make the announcement next month,” said a senior official of the premier think-tank panel.


The government has also taken note that banks charge astronomical interest on partial credit card payment of the outstanding amount. Hence prospective users are wary of using cards.

“The promotion of plastic money is central to the idea of a digital economy. Some banks charge even 42 per cent interest per annum on partial payments, while some others charge between 24 to 39 per cent. This is unacceptable, banks are taking customers for a ride in the absence of strict regulations,” said a senior NITI Aayog official.


Sources said discussions have been held at the highest level by officials of the finance ministry, RBI and the NITI Aayog to arrive at the maximum interest rate to be charged by banks on the outstanding amount, if credit card holders fail pay their bills in full.

“The Supreme Court had stated in the past that banks should not charge interest exceeding the normal rate for other banking services.

While the personal loan interest percentage varies from 11 to 18 per cent across banks, credit cards invite much higher rates. The RBI will soon come up with a cap on credit card interest rates, which will help in their wider acceptance,” added the official.


Small merchants are using three lakh POS machines post November 8. The government is pinning its hopes on a significant jump in digital transactions in the near future. Capping credit card interest rates should help.



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