The RBI on Wednesday came down hard on banks which continue to offer the so-called 'zero percent interest' equated monthly installment schemes on their credit cards despite its repeated reminders and asked them to "strictly desist" from offering such products immediately.
In such schemes, the interest element is often camouflaged and passed on to the customer in the form of processing fee, the central bank said, adding, the sales commission is also loaded on the interest chargeable to the customer.
"Since the concept of zero per cent interest is non-existent and fair practice demands that the processing charge and rate of interest charged should be kept uniform product/segment wise, irrespective of the sourcing channel, such schemes only serve the purpose of alluring and exploiting the vulnerable customers," said an RBI notification.
"RBI's clampdown on zero per cent interest schemes is anti-consumption," said Kishore Biyani, managing director of Future Retail, which runs Big Bazaar.
Govind Shrikhande, MD, Shoppers Stop, said: "RBI should have changed certain aspects of the schemes in case of loopholes instead of stopping it."
Customers are not supposed to pay extra fee for swiping the debit card. The agreement is between the merchant and the bank, who insist on cash payment, and charging the customer for it is neither justifiable nor permitted, the RBI said.
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