Badrul Ahsan :
In the face of widespread allegations that the commercial banks are charging high interest against their credit card loans, the central bank has put cap on such interest rate.
Under the move, the central bank barred the commercial banks from imposing interest on credit cards not five per cent more than the rate they offer to other consumer loanees.
For example, if a bank offers consumer loans at 9 per cent interest, the rate for credit card must not be more than 14 per cent.
The central bank on Thursday issued its guidelines on banks’ credit card operation.
Interest or profit will be charged on the amount due for payment, Bangladesh Bank (BB) said.
Many banks are now charging 30-36 percent rate of interest on credit cards while they impose 9-10 percent interest on their other consumer loan products, a BB official told The New Nation on Thursday.
Another BB high official said if the banks start implementing the new instruction, credit cards interests will almost be halved.
However, according to the guidelines, cardholders who wish to surrender a card due to any change in terms, rates or charges to his or her disadvantage will be permitted to do so without being levied any extra charge for such closure.
The banks will have to specify a period of validity for the card, not exceeding five years from the date of issuance or renewal, taking into consideration the usage purposes and repayment capability of the cardholder.
Any revision in the schedule of interest or profit rates, charges and fees, or terms and conditions and revision of any incentive will be communicated to all active cardholders 30 days before the effective date of such revision.
The banks will not be allowed to enhance or upgrade credit card type or limit without getting consent from the cardholder in writing.
A citizen or resident of Bangladesh, who is above 18 years of age on the date of the application and has sufficient and independent financial ability to pay card-related liabilities caused due to transaction, is allowed to hold credit card.
Issuance of credit card to non-resident Bangladeshis (NRB) and foreign nationals will be subject to the provisions of Foreign Exchange Regulation Act, 1947, guidelines on foreign exchange transaction and related directives issued by the BB.
The customer must have a valid electronic tax identification number certificate and clean or new CIB report, the central bank also said in its guidelines.
The banks will be solely responsible for fulfillment of all ‘Know Your Customer (KYC)’ requirements and such documents will be maintained under safe custody.
The cardholders will be allowed for cash withdrawal up to 50 per cent of the card limit as cash advances.
In case of cards issued in foreign currency against balances held in various foreign currency deposit accounts, the limit should be up to the extent of balances held in respective accounts. For the dual currency credit card, limit in Bangladeshi currency and foreign currency will be clearly segregated and mentioned in the sanction letter separately.
The banks will have to develop comprehensive institutional policy on credit card operations and code of conduct duly approved by their board of directors and to publish those in their official web sites.
‘A supplementary or add-on card will not be issued to any person who is below 18 years of age. Exceptions, however, can be made in case of students aged between 16-18 years who are direct dependent of the principal cardholder and for educational purposes only,’ the guidelines said.
The banks will be extra cautious and assess the credit risk while issuing supplementary cards to persons with no independent financial means.
The banks will make it clear to the principal cardholder that he or she is ultimately liable for all the liabilities incurred by the supplementary cardholders.
