RBI provides protection to Rapists Foreign Banks

While Bombay Money Lenders Act prohibits private money lenders from unsecured lending at more than 15% per annum (reduced from an earlier rate of 21%), RBI, which regulates the banks has allowed them a free hand on the interest that they can charge to customers.

Foreign banks take protection under the Banking Regulations Act which provides them exemption from various state enacted money lender acts in force all over the country. Not only this The Banking Regulation Act prohibits courts in India to decide on the question of excessive interest that is being charged. Thus if you are being charged with excessive interest you do not have recourse to any court for redress of your grievance.

Why have states enacted such laws for money lenders? The genesis of the law resides in the blatant exploitation of small and marginal borrowers that was happening in rural India. Money lenders were regulated through such acts and need to hold a license to do money lending. These acts also provide for transparency in money lenders operation.

Foreign Banks, including ICICI, Standard Chartered, CitiBank, ABN Amro, American Express and some private banks such as HDFC, Centurion Bank of Punjab among others have all entered aggressively in the unsecured lending market. They offer products such as Personal Loans, Consumers Loans, Credit Cards, etc., which are unsecured in nature. As RBI does not regulate such unsecured lending, RBI does not put a ceiling on the interest that can be charged on such loans. Thus these banks have become money lenders to the rapidly growing middle class which is being exploited by them.

These banks charge interest ranging from 30% to 75% per annum on such loans. If such rates are not usurious then what is usurious?

RBI has thus inadvertently allowed the financial rape of common people while abrogating its primary role and duty of regulating the banks. Therefore RBI is the main culprit in this entire game of exploitation that is being played out in the country.

While banks threaten to report defaulting borrowers with reporting to CIBIL and court action, RBI sleeps and does nothing to address the disease.

Foreign banks are crying themselves hoarse about the need to have recovery agents but who pays for these agents? Poor customers of course! The strong and powerful lobby of bankers does not want to be regulated and want the loot to continue.

Credit Consumers Association of India is taking up this fight against RBI and foreign banks and calls upon all right thinking people to join in this fight.