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SBI Cards wants RBI to reconsider ban on 0% EMI schemes

SBI Cards said that it had discontinued the practice of charging a “processing fee” on 0% EMI schemes

October 01, 2013 3:54 IST | India Infoline News Service
SBI Cards will soon approach the Reserve Bank of India seeking a review of the central bank’s decision to ban 0% EMI (equated monthly instalment) schemes for purchase of consumer goods through credit cards, according to a media report.

SBI Cards said that it had discontinued the practice of charging a “processing fee” on 0% EMI schemes, the report added.

Recently, RBI 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 said.

RBI said the interest component in a 0% scheme is often hidden and passed on to consumers in the form of a processing fee. The concept of 0% interest is non-existent and fair practice demands that the processing charges and rate of interest charged should be kept uniform across products and segments, it said.

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