Unlike the previous zero-cost EMI schemes that were ruled out by the RBI, the currently popular no-cost EMI charges interest but the amount is deducted from the final sum paid by the consumer.
In other words, according to Gaurav Jalan, CEO and Founder, mPokket, the buyer does not pay any sum exceeding the product price as the discount equivalent to the interest amount being levied by the bank is offered by the seller or manufacturer and not the bank.
Having said that, one of the disadvantages of these EMI options is that typically, no-cost EMI options are only available on credit cards. Some NBFCs have also begun offering no-cost EMIs through special EMI cards. Experts say one should check with their banks in advance as these no-cost EMIs are
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