Ban on 0% interest scheme to dampen festive shopping
With the Reserve Bank of India (RBI) putting an end to the zero-per cent interest scheme, the move is sure to dampen spirits of buyers during the upcoming festive season.
“The scheme allowed people to buy high-end products.
However, the ban will have a negative impact on buyers who will be forced to postpone their purchases,” said Arun Kejriwal, a financial expert. While there were detractors, the move was well received by others.
A banker requesting anonymity, said, “The products sold under zero per cent scheme do have hidden costs. It is impossible that a businessman will sell his products without making profits.”
What the RBI said
Striking down the scheme, the RBI made it clear that the very concept of zero per cent interest is non-existent and a fair practice demands that processing fee and interest charged should be kept uniform product-wise. Such zero interest schemes only served the purpose of exploiting vulnerable customers. In such schemes, offered on credit cards, the interest element is often camouflaged and passed on to the buyers in the form of processing fee. In a notification, the central bank said banks should not resort to any practice that would distort the interest rate structure of a product as this “vitiates the transparency in pricing mechanism which is very important for the customer to take informed decision.”
The scheme was just a marketing gimmick to lure customers. Now, I will buy products based on utility, and not because they are a luxury
-- Mehul Shah, Sion resident
Any smart person would know that the zero per cent scheme was a farce. RBI has taken a bold step. I would rather swipe a card or not buy at all
-- Vidyasagar K, Chembur resident
I was planning to buy an air-conditioner through this zero interest scheme, but now I’ve to postpone my plan
-- Adil Shaikh, Agripada resident