RBI bans zero percent interest rate scheme for buying goods

The RBI has banned zero percent interest rate scheme for purchase of consumer goods, a move intended to protect customers but may dampen the festive spirit. Further no additional charges can be levied on payment through debit cards.
In the zero percent EMI schemes offered on credit card outstandings, the interest element is often camouflaged and passed on to customer in the form of processing fee.  Similarly, some banks were loading the expenses incurred in sourcing the loan (viz DSA commission) in the applicable rate of interest charged on the product.
Thus according to the RBI Zero percent interest rate scheme distort the interest rate structure of a product and this vitiates the transparency in pricing mechanism which is very important for the customer to take informed decision.
The notification further said that the only factor that can justify differential rate of interest for the same product is the risk rating of the customer, which may not be applicable in case of retail products where the interest is generally kept flat and is indifferent to the customer risk profile.