Express News Service By

You will no longer get tempting offers to buy products at zero per cent interest rate as the Reserve Bank of India (RBI) on Wednesday imposed a blanket ban on such schemes, pointing out that it was essentially a fudge.

As the RBI pointed out, there is no such thing as zero per cent interest rate. For, the interest element is often camouflaged and passed on to you as processing fee. Besides, some banks load the direct selling agent’s commission into the applicable rate of interest charged on the product, the RBI observed. Wednesday’s order forces retailers and banks to come clean on the fine print to ensure transparency.

“In principle, banks should not resort to any practice that would distort the interest rate structure of a product as this vitiates the transparency in pricing mechanism, which is very important for the customer to take informed decision,” the RBI said.

Fair practice demands that the processing charge and interest be kept uniform — product- or segment-wise — irrespective of the sourcing channel, it suggested.

The RBI also scrapped another irritant — an extra charge imposed by some business establishments when you pay using your debit card. That extra charge was a proportion of the goods and services you purchased, say 2.5 per cent. “Such fee is not justifiable and is not permissible,” the central bank said in its notification.