No more zero per cent EMI scheme
Posted on: 25/Sep/2013 3:05:05 PM
One the intervention of Reserve Bank Of India, banks have started withdrawing 0% EMI facility. The RBI’s advised against the practice of banks offering customers the option of staggered payments on big-ticket purchases, including those made on credit cards, into zero-interest monthly installments, could come as a dampener for consumers just ahead of the festive season.
Consumer durable manufacturers are among those who offer the zero per cent facility, mostly on high-value purchases in categories such as Smartphones, laptops, LED TVs and top-end home appliances. With the central bank demanding more disclosures on the scheme, banks have now started withdrawing the scheme ahead of the festival season.
In an operational circular issued last week, the RBI has sought more disclosures under the zero per cent EMI schemes as the central bank was worried over the “hidden costs” involved. “The RBI has not banned the scheme. The central bank wants full disclosure to the customers. This includes the processing charge. Banks were not disclosing the processing charges and loss of cash discount to the customers. The RBI felt it was not right on the part banks to not disclose the hidden charges,” said an official.
Responding to the RBI move to clamp down on such schemes, Shantanu Dasgupta, vice president, corporate affairs and strategy, Whirlpool said: “To some extent this will hurt all of us (in the durables segment). We have run the schemes with the understanding that it was legitimate; now we will have to recalibrate our plans.”
