Complaint alleging anti-competitive practices by 12 Banks in gold loan business, dismissed

Competition Commission of India (CCI): CCI has rejected an information filed by Muthoot Mercantile Ltd. alleging that 12 commercial banks including State Bank of India had entered into an anti-competitive arrangement to determine the price and control the gold loan business and formed a cartel for offering and marketing gold loan products. Other banks which were included are IDBI, Canara Bank, Indian Overseas Bank, Federal Bank, South Indian Bank, Central Bank of India, Syndicate Bank, Vijaya Bank, Dhanlaxmi Bank, State Bank of Travancore and Catholic Syrian Bank. Muthoot Mercantile Ltd., in its information had contended that all the 12 Banks were forming a cartel and launching a new gold loan product viz. agri-gold loan at the rate of four percent (4%) thereby causing adverse/detrimental effect on the informant and other similarly situated NBFCs dealing in gold loan. Informant also alleged that offering loans at the rate of 4% under the guise of agricultural loan against the pledge of gold, is abuse of Interest Subvention Scheme of the Government of India as even RBI had clarified that the benefit of Interest Subvention Scheme was not meant for agri-gold loans or gold loan. After perusing the record, CCI observed that there was no material on record which is indicative of any collusion or concerted practice on the part of the Banks which can be said to be in contravention of the provisions of Section 3 of the Act or can be termed as anti-competitive. While rejecting the contention of the informant, CCI observed that prima facie, no case of contravention of the provisions of either Section 3 or Section 4 of the Competition Act, 2002 has been made out against the banks and dismissed the information. (Muthoot Mercantile Ltd. v. State Bank of India, 2014 CCI 77, decided on December 30, 2014)