The Competition Commission 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 Muthoot Mercantile 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, Indian Overseas Bank and IDBI Bank.
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 finance 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 NBFCs 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 banks 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 banks.
“The grievances (of Muthoot Mercantile) pertain to alleged abuse of Interest Subvention Scheme and contravention of RBI 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 banks.