MISSING THE EMI OPPOORTUNITY

It’s hardly unusual for consumers to wish to own something they cannot afford to purchase outright. EMIs are the simplest way to fulfill this wish. They empower shoppers as well as retailers. While businesses in most sectors are working to make EMI sanctions ever easier and quicker, suspicious regulators have locked the jewellery industry out in the cold. The Retail Jeweller looks back to the pioneers of EMIs in jewellery, and around at the cutting-edge enterprises of today that are finding ways of bringing this essential tool of consumer finance back into the service of jewellery buyers

- SOMA BHATTA

One way of tempting your customers to invest in precious jewellery is to make the cost manageable for them. Equated monthly instalments, or EMIs, are the most familiar way of enabling people to buy high-value consumer products. But not in the jewellery sector! It is practically unheard of for a jewellery store to offer EMI payment plans.

The Reserve Bank of India (RBI) certainly disapproves of the practice in the case of gold jewellery. It bars banks and NBFCs from offering loans for gold jewellery. To make matters worse, the policy guidelines do not allow the bank to even convert jewellery purchases made through credit cards into EMIs which is otherwise a common practice for other purchases. Any loan taken for purchasing jewellery is considered a personal loan on which you pay a higher rate of interest. No bank is allowed to offer a loan for the purchase of precious jewellery; the category has been delisted as per the RBI guidelines.

While banks are reluctant to finance consumer purchases of jewellery, non-banking financial companies (NBFCs) have stepped cautiously into the breach. For the past few years, NBFCs have been hand-holding jewellery retailers through the process. Their efforts have seen varying degrees of success.

Why are banks not open to exploring EMIs in this sector, when doing so would help the jewellery retail industry to expand its reach among consumers, and yield better profits? What has been the experience of jewellers who have offered or do offer EMIs to their customers? What are the ways around this logjam?