The Madras High Court Bench here on Tuesday ordered notice to Union Finance Ministry and Reserve Bank of India seeking their reply to a public interest litigation petition alleging collection of exorbitant rate of interest by private non-banking financial companies such as Muthoot Finance Company and Manappuram Finance Company from those availing gold loans.
A Division Bench of Justice K.N. Basha and Justice P. Devadass ordered issuance of notice returnable by three weeks and adjourned the matter. A lawyer, AR. Jeyarhuthran (52), had filed the case by claiming that the two companies were collecting interest at the rate of 24 to 30 per cent thereby making it impossible for poor borrowers to redeem their jewellery. “It is nothing but exploitation of public at large and daylight robbery. Tonnes of gold are accumulated in the hands of financial companies. Such accumulation would pave way for concentration of national wealth with a few non-banking financial institutions,” the petitioner said and sought the intervention of the High Court to safeguard the economic interest of the weaker sections.
Stating that he had already filed one such PIL petition early this year, the petitioner pointed out that it was disposed of with the observation: “No doubt, the anguish expressed by the party in person is a laudable one, but when there are statutory bodies such as Reserve Bank of India to regulated non-banking institutions, the proper course for the petitioner is to pursue his remedy before the appropriate statutory authority.”
After that, the petitioner claimed to have written to the RBI seeking its intervention in bringing down the rate of interest charged by the NBFCs. However, replying to it on May 3, the RBI had reportedly informed the petitioner that it does not regulate NBFCs. Claiming that it runs contrary to observations made by the High Court, he sought to quash the reply and order for regulation of NBFCs.
