Commercial banks on Monday requested Bangladesh Bank to allow them to set around 25 per cent interest rate on loans disbursed through credit cards, revising the latest BB guidelines on banks’ credit card operation.
A delegation of Association of Bankers, Bangladesh, a platform of top executives of the country’s commercial banks, in a meeting with BB governor Fazle Kabir made the request arguing that the banks would face difficulties in operating credit card products if the latest guidelines were not revised.
BB in its guidelines issued on May 11 asked banks not to impose rate of interest on credit card loans more than five percentage points higher than the highest rate of interest they (banks) offer for other consumer loans.
For example, if a bank offers consumer loans at highest nine per cent interest, the rate for credit card must not be more than 14 per cent, according to the guidelines.
Banks can charge maximum 20 per cent interest on the cardholders in line with the latest guidelines, but they have to bear operating cost of at least eight per cent against the loans disbursed through the credit cards, Eastern Bank managing director Ali Reza Iftekhar told reporters after the meeting.
The banks, however, count around three per cent interest for their other non-card credit products, he said.
‘We have to run call centres and receive the international calls while operating the credit card products. Besides, the banks also offer different types of incentives to the clients time to time’, he said.
The ABB requested the central bank to allow them to set as base rate the highest interest rate of any credit product instead of consumer loans while setting up the interest rate on credit card.
Under the process, the banks will be able to increase the interest rate on credit card up to five percentage points, he said.
The ABB also requested the BB to make the guidelines effective from January 1, 2018 although the central bank earlier said the policy came in to effect from May 11.
Many banks are still charging 30 per cent to 36 per cent rate of interest on credit cards while they are imposing 9 per cent to 10 per cent rate of interest on their other consumer loan products, a BB official said.
BB deputy governor SK Sur Chowdhury told reporters that the central bank would review the ABB’s proposal if it was found logical.
BB governor Fazle Kabir presided over the meeting while ABB chairman and Mutual Trust Bank managing director Anis A Khan, Dhaka Bank MD Syed Mahbubur Rahman and BRAC Bank MD Selim RF Hussain were present.
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