Bank cards have been slowly however certainly discovering a spot in customers’ hearts lately, because of a mix of banks’ aggressive push, a rising aspirational middle-class inhabitants and growing consciousness of the comfort the cost device supplies.
Banks too have been all too keen to concern bank cards, which carry one of many highest rates of interest. However the international coronavirus pandemic has now left them on pins and needles.
They’re now bracing for a double hit: transaction volumes diving and delinquencies rising as unemployed and underemployed customers lose the flexibility to pay again revolving debt taken on throughout higher instances.
Because the countrywide motion management order was put in place on March 26, bank card utilization has nosedived greater than 50 per cent as nearly all eating places and retail factors are closed, in keeping with bankers.
And this outbreak couldn’t have occurred at a worse time for bank card issuers.
“We normally take pleasure in most enterprise throughout Ramadan yearly. However this time is totally totally different,” mentioned Mashrur Arefin, managing director of Metropolis Financial institution, which accounts 35 per cent of the bank cards in circulation, the best.
Final Ramadan, Metropolis’s credit score cardholders had spent Tk 620 crore.
To show the tide, Customary Chartered Bangladesh, which accounts for 14 per cent of whole bank card transactions available in the market, has rolled out promotions to tempt cardholders to splurge, in keeping with Sabbir Ahmed, its head of retail banking.
The British lender’s purchasers can take pleasure in 5 per cent cashback from chosen retail factors.
And people who could be unable to pay their instalments on time would get a debt restructuring facility, he mentioned.
However the opportunity of missed instalments is looming giant on most lenders’ minds.
“We’re struggling to get better the funds from cardholders,” Arefin mentioned, including that within the final one month the financial institution’s overdue cost from cardholders has elevated greater than seven instances.
Metropolis is now contemplating requesting the Bangladesh Financial institution to observe the identical classification and loan provisioning insurance policies as time period loans for credit score cardholders too.
For time period loans, non-payment of instalments for a straight 9, 12 and 18 months would land the accounts within the sub-standard, uncertain and unhealthy classes respectively.
Mutual Belief Financial institution is now brainstorming on the way to facilitate lots of its cardholders to pay their instalments on time, mentioned its managing director Syed Mahbubur Rahman.
“We’ll scrutinise the purchasers’ angle on a case-to-case foundation. The financial institution will block the delinquent purchasers if required.”
The financial institution, which has issued 60,000 playing cards and has Tk 300 crore excellent from this section, is apprehensive about restoration within the days forward as many consumers would lose their capacity to pay again the funds, Rahman mentioned.
“We’ll provide equally month-to-month instalment facility for the purchasers such that they will comfortably repay the loans,” he added.
Dhaka Financial institution, which has 15,000 playing cards in circulation, has nearly stopped issuing new bank cards to keep away from defaults, mentioned its Managing Director Emranul Huq.
Brac Financial institution, which is holding the second place in time period of issuing bank cards available in the market, has additionally confronted difficulties to get better the loans from cardholders, mentioned Md Mahiul Islam, its head of retail banking.
The financial institution, whose card transactions have declined to one-third within the final one month, has Tk 660 crore excellent from its 178,000 bank cards, he mentioned.
To guard the cardholders from monetary ruins, the BB although has taken a number of measures.
Lenders will not be allowed to impose any late cost charges on credit score cardholders from March 15 onwards they usually have been requested to observe the straightforward rate of interest model as a substitute of the sooner methodology of the compound rate of interest.
It has additionally requested banks to not take into account cardholders as defaulters in the event that they fail to repay instalments till June 30.
“That is all nicely and good. The query is when that is over, do these loans begin paying once more and it is wonderful. Or, is there going to be a giant wall of charge-off?” mentioned a financial institution MD requesting anonymity to talk candidly on the matter.
