A day after RBI restricted interest-free EMIs offered to customers in market deals, shopkeepers have started reviewing their sales strategies. The equated monthly instalments extended at a proclaimed zero-interest rate had wooed buyers.

The equated monthly instalment schemes are well received by the customers, says Venkitesh, head of sales at QRS, a network of outlets in the fast moving consumer goods sector. The processing charges are minimal, about Rs. 200 only, for a deal worth about Rs.10,000.

The facility is available only for certain models of some companies. The annulment of the scheme will be disadvantageous to the customer and could affect the market. Nevertheless, those who are in need of household items will not be deterred by such reforms, he says.

Rajasekhar, a top executive of Whirlpool India, says the interest-free equated monthly instalment schemes extended by finance companies are beneficial to customers. “The schemes were popular. We are yet to analyse the impact of the RBI directive issued a day ago,” he said.

Martin, a senior sales personnel at Indus Motors, an automobile sales agency, says the zero percent EMI scheme was not popular in the four-wheeler segment.

Binny Immatty, Kerala Samsthana Vyapari Vyavasayi Samithi leader, says the interest-free EMI did not sound practical. Varying rates of processing fee are being charged, which ultimately means that the customer is paying more, he says.

Several retailers adopt misleading strategies. For instance, several manufacturers permit a discount on purchase in cash, but the discount is cut in many of the deals executed through financing companies. There are also retailers who charge extra for payment done through credit cards.

If the RBI can bar zero-interest schemes in retail, why is not such a policy applicable to the banking sector, asks Mohandas, who had worked with public interest litigants. The authorities had given green signal to sharia-compliant financing in Kerala recently, which forbids interest regime.

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