The Reserve Bank of India has asked banks to stop offering 0% Equated Monthly Installment (EMI) schemes on consumer goods purchased through credit cards. This might affect the mobile phone sales since most of the Indian companies including Apple, Samsung, LG, BlackBerry and Nokia offer such 0% EMI schemes on select credit cards.
Even though some manufacturers offer cash back and exchange offers, the 0% EMI schemes with Rs. 0 down payment is one of the main reasons for the sales of high-end mobile phones, since these cost more. After the ban, EMI schemes would exist, but not at 0% interest. RBI has asked banks to offer uniform interest rates and processing fee on EMI-based credit card schemes.
Processing charge and RoI (rate of interest) charged be kept uniform, product and segment-wise, irrespective of the sourcing channel and 0% EMI schemes are created only for the purpose of alluring and exploiting vulnerable customers, says RBI. It also wants banks to ensure that merchant establishments do not levy fees on debit card transactions and wants bank to terminate their relationships with merchant establishments who does so.
This move would also affect the sales of the consumer durables. What do you think about the new move from RBI? Let us know in the comments below.