In September 2013, the RBI declared that zero percent interest does not exist. It is now 2026. Open any shopping app. Count the no-cost EMI offers. Then ask yourself: who, exactly, is being governed here?
Priya is twenty-eight years old, works at a BPO in Pune, and earns ₹32,000 a month. Last October, during a sale where her phone buzzed about seventeen times in a single afternoon, she bought a washing machine for ₹34,000. She did not have ₹34,000. She had, the app told her, something better: no-cost EMI. Six months. ₹5,667 a month. Zero interest. The banner was orange and large and confident. The button said Buy Now. She pressed it.
What Priya did not know that nobody on that app’s design team was paid to make it easy for her to know was that the washing machine’s cash price, available on a competing platform with no EMI option, was ₹29,500. That ₹4,500 difference, folded neatly into the sticker price before she arrived, was the interest she was told she would not pay. She paid for it. She simply paid it before she paid it, invisibly, in a number she was never shown standing next to a number she was never given the chance to compare.
Priya is not naive. She has a college degree, a smartphone, and enough financial literacy to maintain a budget. She was deceived by a system specifically engineered to deceive people like her, people who are careful, who read the screen, who believe that a number presented by a large and apparently legitimate corporation is the real number.
It was not the real number. It never is.
Here is the fact that should end this story in a paragraph, except that it hasn’t ended anything, which is itself the story.
In September 2013, the Reserve Bank of India issued a formal circular to every scheduled commercial bank in the country. Its language was unambiguous. It stated that the concept of zero percent interest is non-existent. It stated that banks must not resort to practices that distort the interest rate structure of a product. It stated that the interest element in so-called zero percent EMI schemes is often camouflaged and passed on to the customer in the form of a processing fee. It directed that processing charges and interest must be kept uniform, transparent, and clearly disclosed.
That was thirteen years ago.
Open Amazon right now. Open Flipkart. Open the website of any major electronics retailer in this country. Count, if you have the time, how many no-cost EMI offers appear on the first page. They are not hidden. They are not tucked into a footnote. They are the headline, the largest text, the brightest colour, the first thing the interface wants your eye to find. No Cost EMI. Zero Interest. Buy Today, Pay Later, Pay Nothing Extra.
Every single one of those offers describes something the RBI said, in writing, in 2013, does not exist.
The regulator spoke. The corporations heard. The corporations continued. The regulator said nothing further. And thirteen years of Indian consumers hundreds of millions of transactions, lakh upon lakh of crores moved through these schemes have unfolded in the space between a regulation and its enforcement. That space has a name. It is called impunity. And in India, when it involves large corporations and a comfortably distant regulator, it is essentially permanent.
To understand what is actually happening, the machinery needs to be opened and examined without the language the industry uses to describe itself.
The first mechanism is price inflation, the simplest, the most widespread, and the most difficult to detect. The product you want costs ₹60,000. The retailer, in partnership with the lender, calculates that a six-month EMI at 15% interest would cost you approximately ₹4,800 in interest charges. They add ₹4,800 to the price. The product now costs ₹64,800. You choose no-cost EMI. You pay ₹10,800 a month for six months. The banner says zero interest. The math says otherwise. The catch is that you never saw the ₹60,000 price, because it was replaced before you arrived. There is nothing to compare against. The deception is structural; it is not in what the retailer tells you, but in what the interface ensures you never think to ask.
The second mechanism is the processing fee. Even where price inflation is not used, the lender charges a processing fee typically between one and two percent of the loan amount upfront. On a ₹50,000 purchase, that is ₹500 to ₹1,000, collected on day one, before a single EMI is paid. This fee is interest. It is the cost of borrowing money. It is called a processing fee because calling it interest would require the scheme to acknowledge that there is, in fact, interest. There is. There always has been.
The third mechanism is the vanishing discount. During the festive sales that generate the most no-cost EMI transactions, cash buyers are typically entitled to a discount five, eight, sometimes twelve percent. Choose no-cost EMI and that discount disappears. It has not been removed from the transaction. It has been redirected from your pocket to the lender’s, as the subsidy that makes the scheme economically viable for the bank. You were never told there was a discount available. You were never shown what you were forfeiting.
And then there is the GST. Even on the interest that is supposedly waived, the government charges Goods and Services Tax on that waived amount. You pay tax on money you were told you would not pay. This is not a rounding error. This is the government through its tax structure actively participating in and profiting from a scheme its own central bank declared illegitimate.
Four mechanisms. All legal. All operating simultaneously, often in combination, on every major platform in the country, targeting the hundreds of millions of Indians who are entering formal consumer credit for the first time and have no framework for recognising what is being done to them.
The corporations deserve the first reckoning, because they are the ones with their hands in the till.
Amazon, Flipkart, Croma, Vijay Sales, Reliance Digital these are not fringe operators running a corner-shop confidence trick. They are among the most sophisticated commercial enterprises in this country, with legal departments larger than most Indian companies, compliance teams paid to understand every regulation in their operating environment, and technology infrastructure capable of showing every customer the precise cash price alongside the EMI price in a single interface update. They know what the RBI said in 2013. They have always known. They continue running these schemes because the RBI has not meaningfully penalised them for doing so, and because no-cost EMI drives conversion rates the industry’s elegant term for the number of people who buy something they were not planning to buy, for more than they were planning to spend, using money they do not yet have.
The banks and NBFCs are equally culpable, and perhaps more so, because the RBI’s 2013 circular was addressed directly to them. HDFC Bank, ICICI Bank, Bajaj Finance, Axis Bank their names appear in no-cost EMI promotional material as prominently as the products being sold. They designed the three-tier processing fee, the vanishing discount, and the inflated sticker price. They are not passive participants in a retail practice they inherited. They are the architects of a financial product specifically engineered to extract interest from borrowers while allowing everyone in the chain to maintain the fiction that no interest is being charged.
Bajaj Finance alone had over 80 million active customers as of 2024, a significant proportion of whom engage with consumer EMI products. The scale at which this deception operates not in thousands of transactions but in hundreds of millions, not in lakhs of rupees but in lakhs of crores means that the aggregate transfer of wealth from Indian consumers to Indian financial institutions through the no-cost EMI architecture is one of the largest and most consistent retail frauds in the country’s economic history. It does not appear in any fraud register. It generates no arrests. It produces quarterly results that analysts celebrate.
Now for the word that sits at the centre of this entire episode, the word that makes the corporations’ conduct comprehensible and the regulator’s conduct inexcusable.
That word is complicity.
The RBI is not an institution that lacks power. Under the Banking Regulation Act, it has the authority to issue binding directions to every scheduled commercial bank in India, to impose financial penalties, to cancel licences, to supersede boards, to name and shame with the full institutional weight of the country’s central bank behind every statement. It used that power, partially, in 2013, when it issued the circular. It then appears to have set the circular on a shelf and left the room.
What followed is a thirteen-year demonstration of what regulatory capture looks like when it is not dramatic no bribes, no scandals, no revolving doors made public just a quiet institutional decision, renewed annually through inaction, that the financial sector’s commercial interests would not be seriously disrupted by the rules the financial sector was asked to follow. The scheme that the RBI called camouflaged in 2013 is not camouflaged in 2026. It is on billboards. It is on prime-time television advertisements. It is the subject of influencer content watched by millions of young Indians who are being handed their first credit card and their first introduction to debt simultaneously, with no framework for understanding that the orange banner is not, and has never been, telling them the truth.
The government of India is not an innocent bystander either. Consumer protection falls partly under the Ministry of Consumer Affairs, which has the Central Consumer Protection Authority at its disposal, a body with the mandate to prevent unfair trade practices and misleading advertisements. No-cost EMI advertising meets the definition of a misleading advertisement with the same ease that a bucket meets the definition of a container. The CCPA has not, to public knowledge, initiated any significant action against no-cost EMI advertising on grounds of misrepresentation. The ministry that could have amplified the RBI’s 2013 position into enforceable consumer law has, for thirteen years, found other priorities.
Meanwhile, GST is levied on the waived interest component of these schemes. The government, through its own tax machinery, is collecting revenue generated by a financial product its own central bank declared to be founded on a fiction. It is difficult to characterise this as ignorance. It is accurate to characterise it as a choice.
The human cost does not announce itself in a press release. It accumulates quietly, in the lives of people like Priya, in the gap between what they thought they were agreeing to and what they actually agreed to.
India has approximately 100 million credit card holders today, a number that is growing by double digits annually as banks aggressively expand into tier-two and tier-three cities. The BNPL sector Buy Now Pay Later, the digital-era descendant of the no-cost EMI has added tens of millions more to the universe of consumers being offered frictionless access to debt they may not fully understand. A 2024 report by the RBI itself noted rising consumer credit stress, with delinquency rates climbing in the unsecured lending segment. The connection between the architecture of deception in consumer lending and the stress that architecture produces downstream is not difficult to trace. It simply requires the willingness to trace it.
Young Indians entering the workforce are being inducted into debt not through necessity but through design through interfaces built to minimise reflection, through banners sized to crowd out caution, through a festive sale culture that creates artificial urgency around purchases that could wait, at prices that are higher than they need to be, on terms that are less favourable than they appear. This is not the natural operation of a free market. It is the manufactured operation of a captured one where the rules exist on paper, the regulators exist in buildings, and the consumer exists to be harvested.
Priya paid off her washing machine in March. Six months, ₹5,667 each, total ₹34,002. The machine works. She is glad she has it.
She also, in the months since, compared the price she paid to prices on other platforms. She found the ₹29,500 figure. She sat with the mathematics for a while, the ₹4,500 she paid in interest she was told was zero, the discount she forfeited without being told it existed, the processing fee she absorbed on day one without understanding what it was for. She did not file a complaint. There is no complaint mechanism that would meaningfully address what was done to her. There is no helpline for the specific crime of a legal scheme designed to deceive.
She is not angry, exactly. She is something more durable than angry. She is educated, now, in the way that it costs something to learn the way you understand, after the lesson, that the institution smiling at you and the institution protecting you are not the same institution, and may never be.
The RBI wrote its circular in 2013. The government built its consumer protection authority. The corporations read every word of both documents. Then they ran the advertisements anyway.
In the India that actually exists, not the India of regulatory circulars and consumer protection mandates, but the India of orange banners and festive season push notifications and a billion people learning to shop online no-cost EMI is not a scheme that has slipped through a gap in the rules.
It is the gap. And the gap was left open on purpose.
