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CCI rejects cartel charge against 12 banks

The application was filed by Muthoot Mercantile Ltd, which had alleged anti-competitive practices in agri-gold loan business

BS Reporter  |  New Delhi 

The of India (CCI) has rejected charges of cartelisation against 12 banks, including the country’s largest lender, State Bank of India, in the agri-gold loan business.

The application was filed by Ltd. It had alleged anti-competitive practices were taking place by giving the same interest rate in the agri-gold loan business. Beside SBI, those charged included Canara Bank, and

Muthoot alleged that by forming a cartel and launching a new gold loan product, the agri-gold loan, at four per cent, these lenders had hit it and other similarly situated non-bank companies (NBFCs) in the segment.

“It is alleged that the concerted bid of the opposite parties (banks) to throw the informant (Muthoot Mercantile) and the identically situated out of the competition is borne out of the fact that the opposite parties not only offered the gold loan product at the rate of four per cent in the name of agri-gold but also shut their eyes to the end-use of the loans so offered,” said CCI in its order, made public on Monday.

In this regard, it was stated that the Reserve Bank of India had in 2012 noted this allegedly coordinated circumvention of its norms on 'Interest Subvention Scheme'. The banking regulator had advised to strengthen their systems for pre-sanction scrutiny and post-disbursement supervision, among others.

Rejecting all the allegations, CCI said no case had been proven on contravention of Section 3 of the Competition Act, regarding anti-competitive behaviour, against these 12

“The grievances (of Muthoot Mercantile) pertain to alleged abuse of Interest Subvention Scheme and contravention of guidelines. The remedies whereof lie elsewhere,” it said.

Muthoot, it said, had except for placing on record the advertisements issued by the banks, not placed on record any material showing collusion by these 12

First Published: Tue, January 06 2015. 00:40 IST