The rate will be effective from Oct 1, Bangladesh Bank said in a notice on Thursday.
Referring to its policy guidelines on credit cards dated Aug 3, 2017, the central bank said the interest rate on credit cards must not go 5 percent above the highest interest charged on other loans offered by a bank. The interest rate will only be levied on any outstanding amount.
According to the central bank’s policy, up to 50 percent of the credit card limit can be withdrawn in cash by a customer. But no unsolicited loans or other facilities can be offered based on the credit card.
“It has been noticed recently that some banks are defying the policy and providing loans under different names which can be drawn in cash. This increases the credit risk for the bank while charging an unreasonably high interest at a flat rate is also against the interests of the customers.”
The central bank also noted that some banks have been charging interest on unpaid credit card bills from the date of transaction and charging late fees at progressive rates against the unpaid bills.
Under the circumstances, Bangladesh Bank decided to cap the interest rate on credit card bills at 20 percent while barring banks from levying interest on unpaid credit card bills from the date of a transaction.