BB issues guidelines for Islamic credit cards

The Bangladesh Bank has issued comprehensive guidelines for Islamic Credit Card (ICC) operations, establishing a Shariah-compliant framework for card-based payments and financing while strengthening risk management, consumer protection, and governance.

Under the new regulations, banks offering ICC services must ensure all products, contracts, transactions, fees, and operational procedures strictly comply with Islamic law and the central bank’s rules.

The central bank has adopted a principle-based and prudential approach to regulating Islamic credit cards. 
The framework emphasises the prohibition of Riba (interest), Maysir (gambling) and excessive Gharar (uncertainty), as well as the avoidance of prohibited Hiyal (legal stratagems).

It also seeks to promote genuine economic activity and consumer protection while aligning ICC operations with Maqasid al-Shariah, particularly the preservation of wealth, or Hifz al-mal.

The guidelines state that Islamic credit cards should not be designed as a means of generating income from customer indebtedness. Banks must not encourage customers to spend beyond their means or accumulate revolving debt.

Banks must also ensure that their income from ICC operations does not increase with a customer’s outstanding balance or the period of payment deferral or delay.

Which banks can issue Islamic credit cards?

Any scheduled bank providing Islamic banking services may issue an ICC denominated in Bangladeshi taka.
Foreign-currency or dual-currency ICCs may be issued only by banks that are also Authorised Dealers.

Banks must formulate institutional policies and strategies for their ICC businesses. Their policies and codes of conduct must be vetted by their Shariah Supervisory Committees (SSCs) and approved by their boards.

Banks must assess both the creditworthiness and repayment capacity of applicants. 

Credit limits must be set conservatively against verified income, with the objective of preventing over-indebtedness rather than maximising a bank’s exposure.

Terms and conditions must be provided in a legible format and, where applicable, in Bangla and/or English. 
They must clearly specify the cardholder’s liabilities and obligations, eligibility requirements, fees and service charges, as well as the methods used to calculate them.

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Types of Islamic credit cards

The guidelines recognise several types of ICCs. 

General-purpose cards may be used to purchase goods and services from participating merchants and can be offered in variants such as Platinum, Gold and Classic based on their services and benefits.

Co-branded cards may be issued in partnership with merchants, retailers, airlines, e-commerce platforms and service providers. Such partners require SSC approval and annual reassessment.

Prize-based rewards are allowed only under specified Shariah-compliant conditions and with SSC approval.
Special or private-label cards may be restricted to particular retailers, while corporate and supplementary cards are also permitted. 

Foreign-currency and dual-currency cards may be issued subject to applicable foreign-exchange regulations.
Card variants such as Signature, Platinum, Gold and Silver must be differentiated by services and benefits rather than credit limits, outstanding balances or other time- or money-based parameters.

The credit limit of an ICC must remain within the entitlement prescribed under applicable prudential regulations for consumer financing and credit cards.

Amounts used through an ICC must be scheduled into instalments payable on fixed dates, without any increase over the principal, except where permitted under an approved asset-sale structure.

A cardholder who pays the Minimum Amount Due by the due date will not be considered overdue. However, partial payment does not discharge the instalment due, and the unpaid balance will remain payable without any increase.

The Product Disclosure Sheet must clearly explain how the Minimum Amount Due is calculated and how partial payments, early settlements, subsequent card use and restoration of credit limits will be treated.
Cash withdrawals and foreign-currency transactions

Banks may allow cash withdrawals through ICCs, but the aggregate cash withdrawal limit cannot exceed 50% of the card’s credit limit.

Banks must also monitor transactions to prevent merchants from providing cash against card transactions for amounts exceeding the actual cash provided.

All transactions involving foreign-currency ICCs must comply with Bangladesh Bank’s foreign-exchange regulations and the Guidelines for Foreign Exchange Transactions (GFET).

Foreign-currency liabilities may be settled in taka at the applicable spot exchange rate, while conversion charges must remain within prescribed fee limits.

For dual-currency cards, taka and foreign-currency limits must be stated separately. 

International cards linked to Exporters’ Retention Quota (ERQ) accounts may be used only for bona fide business purposes in accordance with applicable regulations.

All fees and charges imposed on ICC cardholders must comply with the relevant provisions of the guidelines. No fee or charge may be imposed unless specifically permitted and within the applicable limits.

Eligibility and card validity

An ICC may be issued to an individual who is a citizen or resident of Bangladesh, is at least 18 years old and has sufficient independent financial capacity to meet liabilities arising from use of the card.

Applicants must have a valid National Identity Card, a valid electronic Tax Identification Number (e-TIN) certificate and a clean or new Credit Information Bureau (CIB) report.

Banks will remain responsible for fulfilling all Know Your Customer (KYC) requirements and securely maintaining the relevant documentation.

The validity of an ICC cannot exceed five years from the date of issuance or renewal, taking into account its intended use and the cardholder’s repayment capacity.
Banks cannot unilaterally upgrade a card or increase its category or credit limit without obtaining the cardholder’s written consent.