Use of credit, debit or ATM cards is gradually becoming essential for the people of Dhaka and other major cities in the country due to its multiple facilities.
Risks in carrying cash, easy withdrawal/disposal, availability of ATM booths in all neighbourhoods and the acceptance of VISA/Mastercard in large number of shops attract an increasing number of urban people to opt for the 'plastic money'.
At present, around 29 banks are doing card businesses in Bangladesh. The number of debit cards is approximately 4 million with 1 million credit cards. There are around 4 million ATM cards currently in use in the country.
Banks are in race to enhance client base to cope with the increasing demands. The annual growth rate of card selling is approximately 40 per cent.
"Once upon a time Credit/Debit cards were status symbol, which has now become absolute necessity to the city dwellers," managing director and chief executive officer of Eastern Bank Limited, Ali Reza Iftekhar told the FE Sunday.
"Cards have become immensely popular for account holders ranging from university students to CEOs of corporate firms for their daily expenditiure," he added.
According to Mr Iftekhar, EBL has now become the second highest card issuing bank in Bangladesh after its five years of journey in card business.
The top EBL official also opined that the rate of use of plastic money in Bangladesh is not satisfactory enough due to different bureaucratic and policy bottlenecks of the central bank.
"We have urged the central bank authority several times to increase both currency limit against credit cards but they are yet to respond. Enhancement of foreign currency limit would lessen activity of kerb market and increase inbound flow of remittance," he added.
"We cannot even increase limit to our trusted card holders due to this constraint," Iftekhar said.
According to him, 10 million people are prospective clients of credit cards in Bangladesh, but less than 5 per cent of them use the cards. "There is a huge vacuum in the market."
According to a Bangladesh Bank (BB) circular, banks can allow credit up to BDT 5,00,000 and US$ 5,000 for an individual per annum.
The BB circular also made a tax identification number (TIN) mandatory for credit card users.
Taufiq Hassan, head of cards and alternative channel of BRAC Bank Ltd, said making a tax identification number (TIN) mandatory for credit card users is seriously hampering its growth in the country.
"Bankers have no bindings of checking TIN numbers before issuing any amount of loan to parties but it is mandatory before issuing only credit card worth only Tk 5,00,000. Is it not self contradictory?" he questioned.
He said the use of cards would increase significantly within a couple of years provided the rules are simplified.
Md Amir Hossain Majumder, senior vice president and head of card division of Prime Bank Ltd said expansion in card use might become a good source of revenue income for the government as the authority can check the expenditure of any one through card number.
He said the government can make national ID card number mandatory before issuing credit card, not TIN.
"For example, if a person earns Tk 10,000 per month he/she is eligible for use a credit card but the law of the land does not compel him to pay income tax. In such case how can we issue him a card," he added.
"All 29 banks are knocking the small segment of people who have TIN numbers which enable a person to obtain more than one credit card from banks and thus risks of default in repayment is becoming high," Majumder added.
"People are eager to have a card but we cannot serve them. Increased use of cards helps a country boost revenue earnings," he said
"Transaction by card is an accounting trade. Nobody can show anything less than their actual consumption," he said.
Source: The Financial Express