RBI now against 0% EMIs for consumer goods, banks withdraw finance schemes; festive sales likely to be hit
KOLKATA: Planning to buy a phone or a television during the upcoming festive season? Don't bet on paying off the bill in interest-free instalments. These schemes are being withdrawn as the Reserve Bank has frowned on the practice of banks tempting consumers to make big-ticket purchases by offering to break up credit card payments into EMIs.
RBI feels consumers have been fooled by zero per cent or discounted interest rate schemes into believing that bank funding comes for free, and wants them stopped. Consumer durable manufacturers offer the zero per cent facility mostly on high-value products such as smartphones, LED TVs and premium home appliances.
"Such schemes only serve the purpose of (luring) and exploiting vulnerable customers," the central bank said in a confidential note to banks on September 17. "These were found to be impinging on customer protection, accounting integrity and thereby the fair market practices which banks should epitomise."
ET has a copy of the note. There was no response from the central bank to queries regarding the note.
KOLKATA: Planning to buy a phone or a television during the upcoming festive season? Don't bet on paying off the bill in interest-free instalments. These schemes are being withdrawn as the Reserve Bank has frowned on the practice of banks tempting consumers to make big-ticket purchases by offering to break up credit card payments into EMIs.
RBI feels consumers have been fooled by zero per cent or discounted interest rate schemes into believing that bank funding comes for free, and wants them stopped. Consumer durable manufacturers offer the zero per cent facility mostly on high-value products such as smartphones, LED TVs and premium home appliances.
"Such schemes only serve the purpose of (luring) and exploiting vulnerable customers," the central bank said in a confidential note to banks on September 17. "These were found to be impinging on customer protection, accounting integrity and thereby the fair market practices which banks should epitomise."
ET has a copy of the note. There was no response from the central bank to queries regarding the note.
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