Economy

Is No Cost EMI Really No Cost? Find Out How It Works

We all must have heard the term ‘No Cost EMI’ several times in the near past. It almost sounds like one doesn’t have to pay the entire amount and not pay anything extra to suffice for the payment in installments in small amounts. It signifies that there is no added interest attached to the process. 

When you hear the words “No-Cost EMI,” it could make you feel strange. Is it truly possible to achieve such a goal? Why would someone in the market share fee money this way? These questions are hard to come across, and finding answers is even more difficult. “No-cost EMI” is not a real thing. You must understand how and what meaning No Cost EMI, its functions and whether or not you should invest in it.

No-cost An EMI is a payment plan that allows you to pay for a product in monthly installments without incurring any interest charges. By falling into the trap of such incentives, such schemes try to lure people into buying more things. The scheme’s primary goal is to get you to spend more money.

How does it work?

Let us take an example and see how this method works.

Suppose a customer intends to buy an electronic product worth Rs 60,000.

If the customer chooses a three-month no-cost EMI plan with a 10% interest rate, the buyer will have to pay Rs 10,000 in interest. If the consumer agrees to pay the complete price upfront, the item will be offered at Rs 50,000.

They must, however, pay the entire sum, which is Rs 60,000, if they choose no-cost EMI. The interest is paid to the financing bank in this case, which is Rs 10,000, and the remaining amount, which is Rs 60,000, is paid to the retailer/store.

You would have paid Rs 50,000 if you had made an upfront payment, but corporations add on their interest component to make it appear to have no interest and no discount.

The RBI Circular 

No-COst EMI practice by NBFCs or banks has been discontinued since 2013, when the RBI abolished it.

The Reserve Bank of India (RBI) issued a circular on September 17, 2013, banning all no-cost EMI schemes, claiming that “the interest element is often camouflaged and passed on to the customer in the form of the processing fee.”

QR Code Bharat

India is progressively transitioning to a cashless economy, and the government has developed new software to aid in this shift in conjunction with private enterprises. In partnership with India’s three mobile payment providers, RuPay, MasterCard, and Visa, the National Payments Corporation of India (NPCI) has developed a new online retail payment system.

The government has teamed up with India’s three mobile payment companies to create the ‘Bharat QR’ standard Quick Response (QR) code. This method will allow the free flow of cash between the three systems and eliminate any restrictions on card usage imposed by any service providers. This is the first time in India’s history that all of the country’s main payment gateways have joined together to create a unified payment system under Reserve Bank of India standards (RBI).

Currently, 14 banks are part of the Bharat QR facility.

Member Banks of the Bharat QR

Presently, 14 banks are part of the Bharat QR system:

State Bank of India (SBI)

Axis Bank

Bank of Baroda

Bank of India

Citi Union Bank

Development Credit Bank

Karur Vysya Bank

HDFC Bank

ICICI Bank

IDBI Bank

RBL Bank

Union Bank of India

Vijaya Bank

Yes Bank

Using the QR Code for Bharat

Customers will not need to carry all their cards to complete a transaction because the system has been harmonized across all card networks. The customer must link their cards to the app and utilize the correct card while purchasing.


The card or bank account must be linked to the app as a one-time activity.


The customer must use the mobile app to scan the Bharat QR code and make a payment. Once they open the mobile app, they will find a scanner on the home page through which they can scan the QR codes. 

The value of the transaction will be taken from the customer’s account and sent to the merchant’s account.

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