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0% EMI schemes: There needs to be transparency, says RBI

RBI said the timing of the ban on 0% interest schemes was perfect as during festive seasons mis-selling remains at peak

October 10, 2013 3:00 IST | India Infoline News Service
The Reserve Bank of India on Wednesday said it has no issues with banks offering loans to credit cardholders for buying consumer goods or services.
However, the central bank said that there needs to be transparency with the process.

Last month, RBI had banned 0% interest schemes for purchase of consumer goods through credit cards.

According to RBI, consumers have been fooled by 0% or discounted interest rate schemes. They are made to believe that bank funding comes for free.

Consumer durable manufacturers offer the 0% 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 RBI had said.

Speaking to reporters in Mumbai, RBI Deputy Governor KC Chakrabarty said, there is no ban on giving loans on credit cards. But the interest rate shouldn't be charged at 12% and claimed that it is only 0% interest.

Lenders should maintain transparency while giving loan to borrowers, he added.
He said the timing of the ban on 0% interest schemes was perfect as during festive seasons mis-selling remains at peak.

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