In fact conversion to EMIs is a practice that the RBI needs to clamp down on with great speed. In the last month alone, I have received at least six complaints about banks tying up with shopping malls, gymnasiums or other service providers to automatically convert payments into EMIs. Invariably, the customer is told that there will be no interest cost attached to the EMIs. Often these payments are converted to EMIs without the customer’s permission and if a customer protests, it is blamed on the merchant establishment and quickly reversed.

In all such transactions, banks collect a service charge of 3%, but this is rarely ever brought to the attention of the consumer. Even in the bank documentation, it is mentioned in fine print. Since the amounts are small, customers rarely notice the charge or take the trouble of lodging a protest. Yet, the complaints have been wide spread enough to nudge the RBI to direct banks to print it in a 12 point Arial font to ensure readability.

It doesn’t stop at that. Another complaint I have forwarded to the central bank pertains to Citibank’s “fly for sure” scheme which lured customers to spend through credit cards on the promise of free air tickets on a certain minimum spend. What they don’t say is that you will not necessarily get a destination of your choice and probably have no intention of flying to the destination that the bank offers ‘for free’.

For instance, one complainant says that instead of tickets to Guwahati, which was his destination of choice, the bank was offering him to Chennai (the second choice), with the condition that a return ticket was available only three weeks later! Or Trivandrum (third choice) where the return was available only two weeks later. Also, instead of a ticket in June, the bank was offering one at the end of July.

... contd.