Indore: Ban may affect sale of electronic goods

This festive season, the city buyers planning to purchase an LCD television set or a latest Microwave Oven might not get the attractive 0% finance interest EMI scheme, as the RBI has banned such schemes --meant to promote sale of consumer goods.

The Reserve Bank of India (RBI) has banned the zero per cent interest rate scheme on purchase of consumer goods through credit cards ahead of the festival season.

The RBI move has been made public on Wednesday.

The move ostensibly is aimed to protect consumers from ‘camouflaged’ interest rates, but it might impact sale of electronic goods in the busy festive season, said majority of retailers in the city.

The retailers from the city, however, defied the notion that such schemes are camouflaged. 

Syed Ahmed Kazmi, DGM (finance) from EWDPL which runs Treasure Island Mall told dna that the ban would lead to a dip in sales from 5 to 7% amid festivities.

He opined that the restriction on 0% interest scheme would hamper buyers especially from the middle class, who rely heavily on EMIs for making big ticket purchases.

Saying that buyers are properly made aware about processing fee in such schemes, Kazmi claimed that interest rates could shoot up in fresh EMI schemes.

Chetan Bargal--Samsung dealer--also affirmed that buyers are mostly told by traders about the processing fee to be levied in credit card payments. He, however, was not sure how much impact the RBI ban would inflict on festive sale.

Gaurav Pahwa from Lotus (consumer durables) presented a different set of theory.
He claimed that apart from banks, there are several non-banking financial corporations, who finance purchase of consumer durables by tying up with manufacturers, so finance won't be concern for buyers.

Pahwa, however, accepted that 0% interest schemes are quite popular among buyers and traders might face initial reluctance from customers as soon as the festive buying picks up.