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Dhaka, Bangladesh (BBN)– The central bank of Bangladesh is going to revise the guidelines on credit card operations, allowing the banks to fix the interest rate on card users on the basis of any loan instead of consumer credit.
The decision was taken at a meeting with leaders of Association of Bankers Bangladesh (ABB), a forum of the banks’ chief executives, held at the central bank headquarters in Dhaka on Monday.
Bangladesh Bank (BB) Governor Fazle Kabir presided over the meeting while the six-member delegation of ABB was led by its Chairman Anis A Khan attended.
The banks have already been asked not to charge more than 5.0 per cent of the highest interest rate of a consumer loan for credit card users.
The meeting also decided that the guidelines on credit card operations will come into effect from January 01, 2018 instead of May 11.
The banks will be allowed to issue supplementary foreign currency or dual currency credit cards under the revised guidelines.
The central bank earlier advised the card issuers not to issue any supplementary foreign currency or dual currency credit card.
ABB earlier submitted a proposal to the central bank, seeking revision of the newly-issued guidelines on credit card operations.
Talking to BBN, SK Sur Chowdhury, deputy governor of the BB, said the central bank is now scrutinizing the issues.
On May 11, the central bank issued the guidelines on the banks’ credit card operations to ensure transparency and mitigate business risks.
“The interest/profit rate on the outstanding amount of credit card will not exceed 5.0 per cent of the highest interest rate, offered in other consumer credits. Interest/profit should be charged on the unpaid amount due for payment,” according to the guidelines.
It also said the method of calculation of interest/profit and other charges, number of days, minimum payment due and outstanding unpaid amount etc should be clearly explained and properly disclosed to the customers.
“The central bank has agreed to extend the timeframe by more than six months for implementation of the guidelines on credit card operations,” Ali Reza Iftekhar, Managing Director (MD) and Chief Executive Officer (CEO) of Eastern Bank Limited, told reporters after the meeting.
The banks will take time to change their system to implement the new credit card guidelines, explained Mr. Iftekhar.
He also said the interest on credit card loan will come down roughly to 25 per cent from the existing level of 30 per cent after revising the guidelines.
The number of credit cardholders is over 0.09 million until April 2017 with the total credit card transactions reaching BDT 108.83 billion.