File photo shows a salesman swiping a customer’s credit card at a point of sale terminal in the capital, Dhaka. Bangladesh Bank on Tuesday instructed banks not to classify credit card holders as debtors in default for their non-payment of fees or non-transactional charges such as annual fees, Bureau of credit information and short message service charges.
Bangladesh Bank on Tuesday instructed banks not to categorize credit card holders as debtors in default for their non-payment of fees or non-transactional charges such as annual fees, Bureau of credit information and short message service charges.
In addition, banks are also urged to take corrective action regarding cardholders who have already been classified as defaulters while they have no other transaction-related fees except non-transaction fees.
A BB circular issued in this regard the same day also prohibited banks from imposing non-transactional charges on credit cards before the cards were activated.
However, cardholders may be classified as defaulting debtors for non-payment of customer transaction fees in accordance with relevant guidelines.
In the circular, the central bank said banks impose different non-transaction fees on cards before they are activated by users.
Banks also categorize cardholders as default debtors due to non-payment of these fees and commissions, thereby confusing people while causing them losses, he said.
Under these circumstances, the central bank issued instructions to protect the interests of customers as well as to ensure an efficient payment ecosystem, the circular said.
These non-transactional fees and charges on credit cards can only be imposed after the cards are activated based on customer consent, he said.
No late fines can be imposed on these non-transaction charges and on late payment charges if there are no other transaction-related charges on the cards.
Banks are also prohibited from charging interest for non-payment of non-transactional fees and commissions.
In September 2021, the central bank set the highest interest rate limit on the use of credit cards at 20%, as many banks were charging their customers more than 27% in violation of BB regulations .
The rate became effective from October 1 of the year.
Circular BB stated that banks were allowed to provide customers with up to 50% of the credit card limit as advances.
The circular also specified that interest could be imposed on unpaid invoices as early as the day after the deadline for payment of credit card invoices. Banks would not charge interest from the date of the transaction, he added.
According to BB data, 35 of the country’s 60 banks operate credit cards.
The 35 banks had 18,74,362 credit card holders in December 2021 and credit card transaction reached Tk 2,229 crore in the month.