INDIAN BANK ASOCN., BOMBAY vs M/S.DEVKALA CONSULTANCY SERVICES

The Supreme Court upheld the Karnataka High Court's decision that the practice of banks rounding up interest rates to the next higher 0.25% was illegal and arbitrary, violating principles of fairness and transparency in banking practices. The Court emphasized that such rounding up resulted in excessive charges to borrowers, amounting to Rs.723.79 crores annually, and directed banks to account for and return the excess interest collected. The ruling reinforced the need for banks to adhere to lawful practices in interest rate calculations as per the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970.