Fatwa #4728519 February 2021India
EMI scheme of Amazon/Flipkart
Question
Assalamualaikum, I am from India, here when we are making a purchase online through amazon/ flipkart through a credit card , they are making it a no cost EMI ( EASY MONTHLY INSTALLMENTS ) by giving upfront discount equal to the EMI interest cost charged by the bank , effectively making it a no cost EMI , is this allowed. Can I go forward and make a purchase as it is a no cost EMI .
For reference u can check flipkart.com/amazon.in for terms and conditions for nocost EMI on banks.
Answer
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
The no cost EMI scheme of Amazon/Flipkart that you refer to is not permissible in Shariah. This is because although they state that it is a “no cost” EMI, giving one the impression that it is interest free, the fact of the matter is that the bank does charge interest. The only difference is that the retailer gives you a sum of money (which they call an upfront discount) which you will then use to pay for the interest that the bank will charge.[i]
In simple words, you are taking an interest-bearing loan from the bank, which you will pay back in monthly instalments. At the same time, in the name of an “upfront discount”, the retailer gives you the same amount of money that the bank will charge in interest. You will then use this money to pay for the interest charged by the bank. This does not negate the fact that you are doing an interest-based transaction, which is prohibited in Shariah.
For further details on no cost EMI, see the following answer:/http://www.askimam.org/public/question_detail/43712
And Allah Ta’āla Knows Best
Muhammed Fayyaadh
Student - Darul Iftaa
South Africa
Checked and Approved by,
Mufti Ebrahim Desai