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RBI has come out with a directive to ban 0% interest rate schemes for purchase of consumer goods; the main reason being, such practices vitiate the transparency in pricing mechanism which is very important for the customer to take informed decision. According to RBI sources “The very concept of zero-percent interest is nonexistent and fair practice demands the processing charge and interest charged should be kept uniform, product or segment wise irrespective of the sourcing channel. Such schemes only serve the purpose of alluring and exploiting the vulnerable customers" In the case of Chit Funds IT IS THE CHIT SUBSCRIBER WHO DECIDES THE RATE OF INTEREST, on a real time basis. That is to say Chit Funds are the best options for liquidity when compare to banks and other intermediaries where the interest rates are subject to fluctuation.