Take the pledge to vote

For a better tommorow#AajSawaroApnaKal
  • I agree to receive emails from News18

  • I promise to vote in this year's elections no matter what the odds are.
  • Please check above checkbox.


Thank you for
taking the pledge

Vote responsibly as each vote counts
and makes a diffrence


Issued in public interest by HDFC Life. HDFC Life Insurance Company Limited (Formerly HDFC Standard Life Insurance Company Limited) (“HDFC Life”). CIN: L65110MH2000PLC128245, IRDAI Reg. No. 101 . The name/letters "HDFC" in the name/logo of the company belongs to Housing Development Finance Corporation Limited ("HDFC Limited") and is used by HDFC Life under an agreement entered into with HDFC Limited. ARN EU/04/19/13618
LIVE TV DownloadNews18 App
News18 English
3-min read

SC Seeks RBI Response on Plea over Banks Not Passing Benefits of Low Interest Rates

Confining the plea to the loans taken on floating interest rates, it said so far as such home, education and consumer loans are concerned, the interest rates moved up or down depending on the interest rate situation.


Updated:October 8, 2018, 8:44 PM IST
SC Seeks RBI Response on Plea over Banks Not Passing Benefits of Low Interest Rates
File photo of Reserve Bank of India headquarters. (Picture courtesy: Twitter)
New Delhi: The Supreme Court on Monday directed RBI to communicate its decision on the representation over banks delaying passing on the benefit of lower interest rates to those who have taken loans at floating interest rates.

A bench of Chief Justice Ranjan Gogoi and Justices S K Kaul and K M Joseph asked RBI to commuinicate within six weeks its decision to public trust 'Moneylife Foundation' which has filed the representation alleging that banks and FIs take tardy approach in lowering interest rates despite the central bank's decision on the repo and reverse repo rates.

The Reserve Bank of India undertakes bi-monthly monetary policy review and sets the repo rate — at which it lends money to the banking/financial system, setting the tone for the interest rate regime which impacts, among others, EMI for home and auto loans. Reverse repo is the rate at which it borrows money from banks.

"According to the petitioner(s) it has not been informed of the result of such consideration leaving the petitioners with no option but to approach this Court...

"We are of the view that, at this stage, the Reserve Bank of India should be directed to communicate its decision in the matter covered by the representation/ letter of the petitioner(s) dated 12.10.2017 to the petitioner(s) within a period of six weeks from today," the bench said.

It granted liberty to the trust and others to approach the court once again if they are not satisfied with the response of the RBI.

The PIL has challenged the manner of implementation of the Reserve Bank of India (Interest Rate on Advances) Master Directions 2016 by banking companies in the country.

Confining the plea to the loans taken on floating interest rates, it said so far as such home, education and consumer loans are concerned, the interest rates moved up or down depending on the interest rate situation.

It said: "When RBI raises the Repo and reverse repo rates, i.e. the rates at which it lends to/ borrows from the commercial banks the interest rate on the loan would normally be expected to move up.

"In contrast, when the RBI reduces the Repo rates, the interest rate ought to normally to go down to the advantage of the consumer. That is the common understanding of floating rates."

The plea said however that the reduction in interest rates was not being passed on to old consumers by the banks on one or other pretext.

"The main issue is that whenever the interest rate goes down, the new borrowers are offered a lower interest rate with respect to similar small loans in the fields of housing, education and consumer goods...

"There is minimal or often no reduction in interest rates of old borrowers. Effectively, the banks are changing the rate for one set of customers not the others. This is gross discrimination in as much as it is in the teeth of equal protection of law enshrined under Article 14 (right to equality) of the Constitution. This unfair and discriminatory, as has been remarked by the RBI own study group," it said.

Banks swiftly raise the lending interest rates the moment the RBI repo rate is raised and the very same banks drag their feet when the RBI repo rate is brought down, it alleged.

The plea has sought a direction to banking companies and NBFCs to calculate the amount of excess interest that has been charged to the existing borrowers under floating rate regime by denying the benefit of lower rates so as to pass through the benefit of a reduction in the interest rates to the existing consumer.

The excess amounts be transmitted to a central corpus under the aegis of RBI and refund of such overcharged amount be directed to the borrowers by crediting the accounts through a centralised scheme to be framed by RBI, it said.
(Get detailed and live results of each and every seat in the Lok Sabha elections and state Assembly elections in Andhra Pradesh, Odisha, Arunachal Pradesh and Sikkim to know which candidate/party is leading or trailing and to know who has won and who has lost and by what margin. Our one-of-its-kind Election Analytics Centre lets you don a psephologist’s hat and turn into an election expert. Know interesting facts and trivia about the elections and see our informative graphics. Elections = News18)
| Edited by: Ahona Sengupta
Read full article
Next Story
Next Story

Also Watch

Most Active
Company Price Change %Gain
Yes Bank 147.15 4.21
SBI 360.85 1.55
Larsen 1,582.05 2.45
Maruti Suzuki 7,061.95 -0.44
Reliance 1,327.75 -0.68
Company Price Change %Gain
Maruti Suzuki 7,070.00 -0.37
Yes Bank 147.05 4.07
TCS 2,053.50 0.19
SpiceJet 144.45 2.05
Larsen 1,578.50 2.26
Top Gainers
Company Price Change %Gain
Yes Bank 147.10 4.18
Tata Steel 503.15 3.92
NTPC 134.05 3.79
Grasim 944.80 3.82
Cipla 585.30 2.58
Company Price Change %Gain
Yes Bank 147.05 4.07
Tata Steel 502.10 3.85
NTPC 134.10 3.79
Larsen 1,578.50 2.26
SBI 360.80 1.75
Top Losers
Company Price Change %Gain
Tech Mahindra 725.85 -1.36
Bharti Airtel 348.50 -1.33
Zee Entertain 371.40 -1.45
Asian Paints 1,367.80 -1.21
JSW Steel 285.00 -1.04
Company Price Change %Gain
Bharti Airtel 348.65 -1.32
Asian Paints 1,368.25 -1.25
IndusInd Bank 1,633.00 -1.02
Bajaj Auto 3,059.10 -0.59
Kotak Mahindra 1,508.20 -0.37

Live TV

Countdown To Elections Results
  • 01 d
  • 12 h
  • 38 m
  • 09 s
To Assembly Elections 2018 Results