RBI directed to examine the reasonableness of rate of interest charged by lenders: DHC

In what may be an important ruling affecting borrowers of loans from Non-Banking Financial Companies (NBFC), the Delhi High Court directed Reserve Bank of India (RBI) to examine whether the rate of interest being charged and foreclosure charges, if any, being recovered by lender were unreasonable or not.
The Court said, “Considering that there is no institution such as Banking Ombudsman to entertain complaints made against Non-Banking Financial Companies, the RBI, instead of simply forwarding the complaint of the petitioner to respondent No.2 [lender] for redressal, ought to have examined it on merits to determine whether, considering the interest rate being charged from the borrowers and foreclosure charges being recovered by respondent No.2 from them, the matter required interference by way of issue of directions under Section 45L of the RBI Act or not. No such exercise, however, was undertaken.”
“Though, such an exercise is likely to result in extra work for the RBI officials, it would be in public interest to bear this additional workload so as to address genuine complaints against NBFCs, so long as no other grievance redressal mechanism is available to the borrowers and depositors of NBFCs,” the Court added.

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