Sub: Consumer products sale on no-cost EMI.

[Sanjeev Goyal]

PMOPG/E/2025/0005494

In order to lure customers, now-a-days many consumer product sellers
are offering interest free EMI schemes to consumers. Any shopping mall
would have such offers with prominent card players like ICICI, Axis,
SBI, HDFC etc.

These EMI schemes are offered by manufacturers in collaboration with
credit card (CC) companies or micro finance (MF) companies. As per
scheme for any given price the sellers would arrange credit through
credit card or micro finance company on EMI basis without charging
anything any cost over & above the sale price. The interest cost is
stated to have been borne by sellers.

However, this is a misleading statement of fact. The EMI statement
issued by CC/MF companies clearly depicts the bifurcation of principal
and interest component of amount financed. The interest charged is
shown exclusively in the statement. Earlier break-up of principal &
interest was not provided by the card companies, it is only after RBI
intervention that a proper division was printed on the statement. So,
here, the price already quoted by seller is inclusive of interest. If
a customer buys goods with upfront full payment he is still charged
ful sale price without any discount. So, in other words, anyone buying
goods with instant cash payment is practically befooled as he has to
pay the interest component despite paying 100% down payment. The
sellers claims that there is no price difference whether you pay
upfront cash or through EMI.

This practice is unethical & deceiving. This induces a customer to buy
goods on credit even if he wants to pay upfront in cash. Promoting
credit, in this way is not a healthy practice for economy. The
traditional Indian values teach that take credit responsibly only when
necessary, as availability of easy credit often leads to overspend.
This is weakening the strongest strength of Indian economy i.e.
savings. Here, seller is charging interest even if you pay in cash and
also making customer believe that he has not paid any extra amount.

I request RBI may take appropriate action in this regard.