Bangladesh Bank (BB) has fixed the interest of credit cards at a maximum 20 per cent to protect the interest of the borrowers amid the corona situation.
Banks can realise late fee for a single time for delay in bills payments, but the bank cannot charge a late fee for several times in any other formats, according to a circular issued by the central bank on Thursday.The directive will be effective from October 1, 2020. Bangladesh Bank’s guideline on credit card operation for banks will remain unchanged.
The circular said banks are providing loans and additional cash withdrawal facility in various names and shape in higher interest against credit cards, violating the regulator rules.
BB observed that such a tendency of providing loans will create an additional burden on the clients as well as raising the volume of risky loans for banks.
Banks cannot charge interest on credit cards’ bill from transaction day of money or good; the interest will be charged after expiring the schedule bills payment day only—- this could not be violated in any way, the central bank said.
The credit cardholders can withdraw 50 per cent cash as loans against his/her cards, banks cannot provide any other loans for the cardholders as per the existing rules in this regard.
Earlier, the credit card users faced trouble as the banks have been charging hefty interest of 24 to 30 per cent on credit cards in different names and shapes.The central bank in a notification on April 15 this year halted charging compound interest on credit cards during Covid-19 pandemic period.
Despite the order, banks realized compound interest on credit card bills.
The bankers, however, said the central bank took the decision without consulting with the banks. Moreover, the banking regulation and policy department of the central bank issued the circular instead of the payments systems department, which knows how banks operate credit card business.
“We know the suffering of the people during this critical time. We could have waived interest by 50 per cent if Bangladesh Bank had consulted with us,” said a top official of a private bank.
According to the central bank data, as of July this year, 59 banks have issued 1,597,748 credit cards and the transactions as of July stood at Tk 12.53 billion.