Ban on zero per cent EMI not to hurt festive sales: Durables makers

NEW DELHI: Consumers durables manufacturers are upbeat of about having good festive sales despite RBI's ban of interest free installment saying purchase of products through such programmes account for a only a small part of the overall offtake.


However, Consumer Electronics and Appliances Manufacturers Association ( CEAMA) and Whirlpool of India agreed that sales of high-value products could be hurt to some extent due to the ban.

"The impact would be marginal as zero per cent EMI schemes account for only 6 to 10 per cent of the total sales depending on the company. Industry would come with some better option," CEAMA Vice President (North) Manish Sharma told PTI.

Expressing similar views, Whirlpool of India Vice President Corporate Affairs & Strategy Asia South Shantanu Dasgupta said: "Only a small percentage of our sales comes from such (interest free) schemes. The withdrawal will therefore not affect our Diwali sales."

More than hurting festive season sales, a Samsung India spokesperson said the ban would affect consumer sentiments.

"We expect that it will impact the consumer buying sentiment if we look at the positive response that the EMI schemes have garnered over the past few months," the Samsung India spokesperson added.

Sharma of CEAMA said since the sector has just been hurt by the impact of rupee depreciation against US dollar, the ban could "dampen the spirit" to an extent.

He further said "more the high value products, which are sold under such interest free schemes" will be impacted.

Expressing similar views, Dasgupta said:" My understanding is that the more high priced products will suffer a blow as equated monthly payments work best for products that are expensive."

The banking sector regulator RBI has banned the policy of interest-free installments popularly known as 0 per cent EMI for purchase of consumer goods through credit cards during the festive sales, however, the industry players are saying that it would have very little impact on it.

The interest-free installments schemes were popular and attract customers during the festive sales, but the companies are now countering it with more attractive schemes.

On September 25, the Reserve Bank of India had banned zero per cent interest rate scheme to protect customers. The central bank has also said that no additional charges can be levied on payment through debit cards.

In the zero per cent EMI schemes offered on credit card outstandings, the interest element is often camouflaged and passed on to customer in the form of processing fee.