Interest rate on credit cards not to exceed 16pc

Bangladesh Bank has directed commercial banks not to charge more than 5 per cent on top of the highest interest rate of a consumer loan for credit card use.

Currently, the average interest rate on consumer credit is 11 per cent.

As a result of the central bank directive, the new credit card interest rate will be no more than 16 per cent.

Bangladesh Bank issued a guideline on 11 May for credit card operations that eases worries regarding credit card interest rates among the clients.

Bangladesh has a total of almost 900,000 credit card users.

However, the banks protested the newly announced guidelines and are yet to act accordingly.

According to the statistics, transaction of Tk 7.35 billion took place through credit card in January this year only. It was Tk 7.05 billion in December last year. A total of almost 8,77,000 credit cards were active in January. Among them, City Bank owned 2,08,000, Eastern Bank 1,50,000, Standard Chartard Bank 1,50,000, and Brac Bank owned 1,03,000 cards.

The new guideline further said, cardholders will be allowed cash withdrawal of up to 50 per cent of the credit limit.

The guideline also said that any type of awards, bonus, coupon or ticket offers are not allowed for attracting customers.

Foreign currency is not allowed for the additional or supplementary cards, the guideline said.

The new guidelines say the banks will have to cut the amount paid in installments while calculating interest.

According to the new guideline, persons aged below 18 are not eligible for credit cards.  However, if a student's studies are dependent on credit card transactions, then it can be issued.

The customer has be informed 30 days prior to any correction in the credit card. No charge can be deducted without the knowledge of the credit card holder.

Any charges or tax of any statutory organisation can be deducted following the consent of the customer.

The guideline further said banks will also have to provide updated data on credit cards to the customers every month.

It also said 14 days has to be given to the customers to pay their bills. Banks have to issue a new bill statement within five days if any customer complains about not getting the billing statement without any charges.

Banks protest

The top four banks providing credit card facilities in the country are unhappy with the new guidelines.

They say credit cards are not at all a loan product. It is such a service that changes a lifestyle. That is why the users are given various discounts. The customers are given 24 hours service without keeping any security deposit and that is why the interest rate is 27 to 35 per cent.

“We’ll request the central bank to reconsider the guidelines”, said additional managing director of The City Bank Mashrur Arefin.

Source: Prothom Alo