2004 (4) TMI 73 - SUPREME COURT

The authority of the bankers to round up the existing interest rates to 0.25 per cent. questioned

Held that:- The Reserve Bank of India could not have interpreted the provisions of the said Act nor thereby could have empowered the banks to charge something more from the borrowers by the process of rounding off of interest. The appellants and the Reserve Bank of India with a view to touching the end of their own shadows in the guise of exercise of their contractual powers vis-a-vis the Banking Regulation Act exceeded their jurisdiction in recovering the tax imposed on them by way of interest under the Parliamentary Act.

We, therefore, are of the opinion that a fund may be created for the benefit of the disadvantaged people.

We are, therefore, of the opinion that in the larger interest a fund for the aforementioned purpose should be created with the amount at the hands of the Union of India and the appellants and other concerned banks, which may be managed by the Comptroller and Auditor General of India. We would request the Comptroller and Auditor General of India to effect recoveries of all the excess amount realised by the Union of India by way of interest tax and interest by the banks and other financial institutions and create the corpus of such fund therefrom. The appellant and other concerned banks are also hereby directed to contribute to the extent of ₹ 50 lakhs each in the said fund.