Multiple choice

RBI issues instructions on rate of interest to banks. The provisions u/s 21A of Banking Regulation Act relate to

  1. maximum interest rate ceiling imposed by RBI

  2. method for fixing BPLR

  3. rate of interest fixed by banks as per RBI guidelines are not subject to scrutiny by courts

  4. cases of NPA accounts in which interest can be debited only when it is recovered
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C Correct answer
Explanation

Section 21-A of Banking Regulation Act relates to rate of interest that is fixed by banks, as per RBI guidelines, are not subject to scrutiny by courts.

Notwithstanding, anything contained in the Usurious Loans Act, 1918 (10 of 1918), or any other law relating to indebtedness in force in any state, a transaction between a banking company and its debtor shall not be reopened by any court on the ground that the rate of interest charged by the banking company in respect of such transaction is excessive. 

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