Credit card holders in India, who pay the highest rates of interest in the world, have been ripped of Rs 6,000 crore as "extra charges" by banks in a span of ten years, according to a rights group.
"The banks have already extracted around Rs 6,000 crore in the name of late fee, cash advance fee, billed finance fee, over-limit fee, cash withdrawal fee, cheque pick up fee and service taxes on all these fees," CV Gidappa, General Secretary of Credit Card Holders' Association of India (CCHAI), said in Chennai quoting a study conducted by his group.
A top official of a multinational bank, who did not want to be named, said banks charge more for credit card transactions as they foresee higher risk of default due to the insecure nature of transactions. Further, credit cards are more convenient tools for easy borrowing.
"Credit card is a very useful instrument as a means of payment. But it should be used as a borrowing tool very sparingly and if so for as short a time as possible", he cautioned.
As part of the study, the association went through the balance sheets and Loss and Profit statements of all private as well as nationalised banks, checking their interest income and non-interest income since 1992 after the introduction credit cards in India, Gidappa said.
It also plans to move the Supreme Court seeking an order asking banks to pay back the extra money collected.
The average interest rates on the card transactions and loans in India are highest in the world, he said.