Credit Card Market in Bangladesh
Executive Summery
Owning a Credit Card is a basic right of a Qualified Financial Services Consumer. So in today’s banking world there is no even any one bank without this modern but necessary facility. It is a key operation of the new banking system. All the bank’s account holders are now enjoying this facility with great appreciation.
All the banks are now trying to give the most hassle free and comfortable system to enjoy the facility. These facilities are under E-Banking system. As the world is becoming like a village now-a-days, people are also trying to the most attach with that, where credit card is a beautiful symbol of it.
With this modern world we are walking. So there are also different types of credit card facilities in our banking arena with various new and upgraded facilities. Here we try our best to make a picture of their facilities.
Introduction
The ‘credit card’, though a new phenomenon in business and transaction arena which had already won the hearts of millions across the globe, has set its foot in this part of the world with its magical power and becoming a way of life here by offering its handy feature and usefulness. In the advent of Information Technology and globalization, now shoppers need not worry about money, all they need is willingness and a credit card to buy anything they want at any places across the ‘Global Village’. Worldwide access, acceptability and popularity as well of credit cards have rose to such an extent that it is now posing a threat to theory of old ‘hard-cash’ possession of currencies amid growing sense of insecurity worldwide. The forward march of ‘plastic money’, the other name of the credit card, is so rapid that the whole concept of monetary system needs immediate review as it has put a question mark in the very existence of paper money.
The main benefit to each customer is convenience. Compared to debit cards and checks, a credit card allows small short-term loans to be quickly made to a customer who need not calculate a balance remaining before every transaction, provided the total charges do not exceed the maximum credit line for the card. Credit cards also provide more fraud protection than debit cards. Additionally, carrying a credit card may be a convenience to some customers, as it eliminates the need to carry any cash for most purposes.
In our country credit card service is becoming more and more popular day by day.
Banking and Credit Card in Bangladesh
Financial sector of Bangladesh, like most developing countries, is dominated by banking enterprises. The commercial banks in Bangladesh are catching up fast with the rest of the world in terms of the use of the most advanced technologies. Starting from online banking and SMS banking, we have also seen the arrival of innovative technologies like the mobile ATM and many more. Credit/Debit Cards: Once a status symbol, the use of Credit/Debit or ATM Cards has now become an absolute necessity for the urban folk of Dhaka and other major cities of the country. With most of the commercial banks offering card services and with relative ease of making one compared to earlier times, Cards have become immensely popular for account holders ranging from university students to CEOs of corporate firms.
Former ANZ Grindlays Bank, now Standard Chartered Grindlays Bank, took a pioneering role in introducing credit card in Bangladesh. It started acquiring Visa and Mastercard nearly 10 years back. In the first few years, its operational area was very limited and concentrated only on the large hotels and restaurants. In 1997 the bank decided to launch full-scale card operation and very realistically brought a wide range of people under its service system. It is now giving a wide range of card services through multifarious quality facilities.
Some of banks providing Credit card facilities in our country:
÷ Standard Chartered Grindlays Bank
÷ South East Bank Ltd.
÷ Eastern Bank Ltd.
÷ Marcantile Bank Ltd.
÷ Eastern Bank Ltd.
÷ Premier Bank
÷ BRAC Bank
÷ City Bank
÷ IFIC Bank
÷ Dhaka Bank
Credit Card Market in Bangladesh
6. Credit Card Brands
Form the above information we found that most of the Bank in our country provide Visa card and Master card service. Some of the bank use Q-cash card service. Bt Visa and Master card is much more popular.
2.Types of Credit Card offered
Every Bank which provides credit card service having mainly two types of service :
1. Gold
2. Classic
These two types are local and international card, Local Gold and Local Classic , and Universal Gold and Universal Classic . Card limits of different banks varies. Janata Bank provides local credit card service only. But other Private Banks provide local and international card service.
3. Number of card holders over years
A credit card is a great financial tool. It can be more convenient to use and carry than cash, and they offer valuable consumer protections. Paper money and coin are risky and burdensome for carrying. One can avoid the toll of finger-counting changes in this system. Dollars, Pounds or Taka can be plundered, lost or stolen. In case the card is stolen or lost the clients’ bank will issue a fresh card.
Bank Asia Ltd.
| Date | 15/11/2009 | 31/12/2008 | 31/12/2007 | 31/12/2006 | 31/12/2005 |
| Number of Cardholder | 4500 | 3500 | 3000 | n/a | n/a |
The mission of Bank Asia Ltd. is to set high standards of integrity and bring total satisfaction to their clients. According to their mission that to create satisfaction among client they introduce credit card and the chart shows that the number of their credit card holders increased day by day.
Exim Bank Ltd.
| Date | 31/12/2009 | 31/12/2008 | 31/12/2007 | 31/12/2006 | 31/12/2005 |
| Number of Cardholder | Now total 3000 | Only 800 |
NCC Bank Ltd.
| Date | 31/12/2008 | 31/12/2007 | 31/12/2006 | 31/12/2005 | 31/12/2004 |
| Number of Cardholder | 1876 | 1730 | 1732 | 1024 | N/A |
NCC Bank has launched its Visa Credit Card Service on August 22, 2005 and within 2008 umber of their cardholders are increasing trend.
Dutch-Bangla Bank Ltd.
| Date | 31/12/2009 | 31/12/2008 | 31/12/2007 | 31/12/2006 | 31/12/2005 |
| Number of Cardholder | Now total 2000 members |
Janata Bank Ltd.
| Date | 30/10/2009 | 31/12/2008 | 31/12/2007 | 31/12/2006 | 31/12/2005 |
| Number of Cardholder | 157 | 150 | – | – | – |
Mercantile Bank Ltd.
| Date | 31/12/2008 | 31/12/2007 | 31/12/2006 | 31/12/2005 | 31/12/2004 |
| Number of Cardholder | 10950 | 6051 | 3212 | N/A | N/A |
Dhaka Bank
| Date | 31/12/2008 | 31/12/2007 | 31/12/2006 | 31/12/2005 | 31/12/2004 |
| Number of Cardholders | 6898 | 5188 | 5327 | 5177 | 4830 |
IFIC Bank Ltd.
| Date | 31/12/2008 | 31/12/2007 | 31/12/2006 | 31/12/2005 | 31/12/2004 |
| Number of Cardholders | 60000 |
Jamuna Bank Limited
| Date | 31/12/2008 | 31/12/2007 | 31/12/2006 | 31/12/2005 | 31/12/2004 |
| Number of Cardholder | 13000 | 7000 | 5500 | 2500 | Nil |
The Premier Bank Limited
| Date | 31/12/2004 | 31/12/2005 | 31/12/2006 | 31/12/2007 | 31/12/2008 |
| Number of Cardholder | 3,000 | 2,500 | 2,000 | 3,000 | 12,000 |
Every Bank has an increasing trend in their number of credit cardholder. It refers that the credit card market in our country is expanding day by day. People of our country are becoming more used to this facility as it is less risky than paper money.
4. Income and expenditure of card division over years:
The graphical presentation of expenditure card revenue of credit card of some bank are given below:
Graphical Presentation of Revenue and Expenditure of Credit Card:
Revenue and Expenditure of credit card of NCC Bank
Revenue of NCC Bank Ldt.
Expenditure of NCC Bank
The chart shows that the expenditure for credit card is decreasing and revenue is increasing .
Revenue and Expenditure of Credit Card in BRAC Bank
Revenue from Credit Card in BRAC Bank
Expenditure for Credit Card in BRAC Bank
The chart shows that the expenditure for credit card is decreasing and revenue is increasing.
Revenue and Expenditure of Credit Card in National Bank
Revenue from Credit Card
Cost for Credit Card
Expenditure for credit card in national bank is increasing within the last few years that is why the revenue from card has been decreased.
Revenue and Expenditure of Credit Card in Premier Bank Ltd.
Expenditure for Credit Card
Revenue and Expenditure of Credit Card in Premier Bank Ltd.
Revenue from Credit Card
Revenue and Expenditure of Credit Card in Premier Bank Ltd.
Revenue from Credit Card
Expenditure for Credit Card
Revenue and Expenditure of Credit Card in Dhaka Bank
Revenue from Credit Card
Expenditure for Credit Card
In the most of the bank, revenue is in the increasing trend. Bt in some of bank revenue fluctuate. That means in some year their revenue increased and in other year decrease.
Banks expenditure depends on how they capture the market. When they want to capture the market then they need to spend more. This is the one of the main reason of their increased expenditure. In the initial stage bank do not have any revenue when they lonch the credit card. Banks generally borrow the money they then lend to their customers. As they receive very low-interest loans from other firms, they may borrow as much as their customers require, while lending their capital to other borrowers at higher rates. If the card issuer charges 15% on money lent to users, and it costs 5% to borrow the money to lend, and the balance sits with the cardholder for a year, the issuer earns 10% on the loan. This 5% difference is the “interest expense” and the 10% is the “net interest spread”.
his is the cost of running the credit card portfolio, including everything from paying the executives who run the company to printing the plastics, to mailing the statements, to running the computers that keep track of every cardholder’s balance, to taking the many phone calls which cardholders place to their issuer, to protecting the customers from fraud rings. Depending on the issuer, marketing programs are also a significant portion of expenses.
5.Amount of Cash withdrawals through credit card per
Credit card is becoming more popular day by day in our country. The amount of withdrawal is increasing day by day in our country. Dutch Bangla Bank Ltd. deals 25% of the total cash withdrawal through credit card.
Number of Card defaulters per year
here is a number of credit cardholders who do not give the money to the bank after finishing the card limit. In this case, the banks have to fall in troubles and expansion of credit cards is naturally discouraged. Again, there are some people who try to take illegal advantage over credit cards.
As people are becoming more popular with the credit card that is why the possibilty of the defaulter of credit card is also increasing.
Graphical presentation of number of credit card defaulters of some bank:
Number of Card Defaulter in Bank Asia Ltd.
Number of Card Defaulter in NCC Bank Ltd.
Number of Card Defaulter in NCC Bank Ltd.
Number of Card Defaulter in Premier Ltd.
Number of Card Defaulter in Premier Bank Ltd.
7. Advertising Expenditure:
Banks have to make high expenditure for their credit card service to increase the demand. For advertising they use Bill board, News Paper, Electronic Media, Personal Selling. The most common advertising media is News paper which is used by all banks for their advertising. Some expense a lot in electronic media for advertising. News paper is the most used media of the advertising . Expenditure of advertising vary from bank to bank.
Bank Asia Ltd.
| Year | 2009 | 2008 | 2007 | 2006 | 2005 |
| Newspaper | Tk. 20 Lac | Tk. 8 Lac | Tk. 5 Lac | – | – |
Exim Bank
| Year | 2009 | 2008 | 2007 | 2006 | 2005 |
| Newspaper | 15 lakhs | 5 lakhs | |||
| Others (Please Mention) | Hand bill papers 5 lakhs. | 1 lakh. |
NCC Bank
| Year | 2008 | 2007 | 2006 | 2005 | 2004 |
| Electronic Media | 2000000 | 1050000 | 500000 | 355000 | N/A |
| Newspaper | 1500000 | 575000 | 200000 | N/A | N/A |
| Bill Board | 1000000 | 700000 | 500000 | N/A | N/A |
| Personal Selling | NONE | NONE | NONE | NONE | NONE |
| Others (Please Mention) | NONE | NONE | NONE | NONE | NONE |
Dutch-Bangla Bank Ltd.
| Year | 2009 |
| Newspaper | 15 lakhs |
| Bill Board | 5 lakhs |
| Others (Please Mention) | Hand bill papers 3 lakhs. |
Mercantile Bank Ltd
| Year | 2008 | 2007 | 2006 | 2005 | 2004 |
| Newspaper | 7 lac | 2.5 lac | 2 lac | N/A | N/A |
| Personal Selling | 2 lac | 2.5 lac | N/A | N/A |
BRAC Bank
| Year | 2008 | 2007 | 2006 |
| Total | 94285036 | 64649691 | 50273749 |
Dhaka Bank
| Year | 2008 | 2007 | 2006 | 2005 | 2004 |
| Newspaper | 5 | 10 | – | – | – |
| Bill Board | 5 | 8 | – | – | – |
| Personal Selling | 2 | 2 | 1 | 1 | 1 |
National Bank Ltd.
| Year | 2008 | 2007 | 2006 | 2005 | 2004 |
| Total | 46179467 | 8370521 | 10940775 | 5936730 | 3448087 |
The Premier Bank Limited
| Year | 2008 | 2007 | 2006 | 2005 | 2004 |
| Newspaper | 2,00,000 | – | – | 1,00,000 | 1,00,000 |
| Personal Selling | 5,00,000 | – | – | – |
8. Fees and Charges
Fees and charges also vary from bank to bank.
NCC Bank Ltd.
| Credit Card Category | Annual Fees | Late Payment Fees | Excess Over Limit Fees | VAT |
| Classic Local | 1000 | 200=/ | 200=/ | 15% |
| Gold Local | 2000 | 200=/ | 500=/ | |
| Gold International | 3000 | $10 | $10 |
Dutch-Bangla Bank Ltd.
| Particulars | Local | International / Dual | |||
| Gold BDT | Classic BDT | Gold USD | Classic USD | ||
| Annual fee (customers) | 1500 | 1000 | 2500 | 1300 | |
| Annual fee (Bankers) | 1500 | 1000 | 2550 | 1300 | |
| Supplementary card | 0 | 0 | 500 | 500 | |
| Excess Limit | 250 | 250 | 10$ | 10$ | |
| Late Payment | 300 | 200 | 10$ | 10$ | |
| Return Cheque | 50 | 50 | 5$ | 5$ | |
| Statement Retrieval fee | 50 | 50 | 3$ | 3$ | |
| Sale slip Retrieval | 100 | 100 | 10$ | 10$ | |
| Outstation Cheque collection | 100 | 100 | 10$ | 10$ | |
| Pin replacement fee | 200 | 200 | 200 | 200 | |
Janata Bank Ltd.
u Card Fees and Charges: The following fees and charges are realized from Janata Bank Credit Card customer
| 500/- 500/- | 1. Card fees Ø Annual Fees Ø Renewal Fees |
| 500/- | 2. Replacement/Lost Card fee |
| 500/- | 3. Supplementary Card fee |
| 250/- | 4. Late Payment fee(2%, p/m, Minimum) |
| 50/- | 5. Statement Retrieval fee |
| 100/- | 6. Sales Slip Retrieval fee |
| 250/- | 7. PIN Replacement fee |
Interest:
Any amount outstanding after the payment due date will apply 2% per month calculated on daily basis from the date of posting transaction to the card account until the amount is paid in full. Charging of interest will also include all the transactions shown on the current statement.
Interest on Cash Advance:
In case of cash withdrawal from ATM BY Credit Card, interest will be charged @ 2% per month from the date of Cash withdrawal until the cash drawn amount is paid in full. There will be no cash advance at Janata Bank ATM.
Late Payment Charge:
If the minimum amount due is not paid within the payment due date, a late payment fee @ 2% of the billing amount or Tk250/- whichever is higher will be charged.
Service Charge:
For using ATM of banks
÷ Tk. 10 per transaction – 16 Q-Cash Consortium banks(except Janata bank)
÷ No service charge for using ATM booths of Janata Bank Ltd.
÷ Tk 15 per transaction –BRAC Bank Ltd.
÷ Tk 20 per transaction –Dutch Bangla Bank Ltd.
Mercantile Bank Ltd.
Fees and Charges
÷ Gold int’l- $ 70 annually
÷ Classic int’l – $35 annually
÷ Gold local- 1800Tk. annually
÷ Classic local-900 Tk. annually
– Late payment charge Tk.250 per month
– Over limit Tk.350
Dhaka Bank
÷ Local Classic: Taka. 1000
÷ Local Gold: Taka. 2000
÷ Dual Classic: Taka. 2000
÷ Dual Gold: Taka. 3000
9. Target Customers
÷ Sophisticated people,
÷ business man and
÷ MNC Service holders
÷ Bankers
÷ Corporate client companies and their employees
÷ Financial Institutions, Doctor, Engineer, University Teacher, Multinational Company, Govt. high officials.
÷ Private Organization Service Holder
÷ Govt. Organization Service Holder
÷ Doctor
÷ Engineer
o and other service holder who is capable to hold the credit card.
10. Customer Appraisal Procedure
Different Banks use different Customer Appraisal Procedure :
÷ Customer Phone Verification (CPV)- a procedure of custimer’s given information
÷ Income or salary statement checking
÷ Must be a customer of any branch of their bank
÷ Description of the movable and immovable assets, other bank loans and liabilities of the applicant
÷ In case of business man last six months transaction statement is repuired (in Janata Bank)
÷ Declaration from the applicant whether they take loan from other sources
Banks assess risk based on the information provided by the person wants to be the card holder.
11. Limit determination Procedure
Determination of Limit varies bank to bank and also customer to customer. To determine the limit of the credit card
| No. | Banks | years | Amount | ||
| 2007 | 2008 | 2009 | |||
| 1 | Bank Asia Ltd | Around 0.025% of the profitability of the bank | |||
| 2 | Commercial Bank of Ceylon | N/A | |||
| 3 | Exim Bank Ltd. | 0.33% | 1 crore & 10 lakh | ||
| 4 | NCC Bank Ltd | 4 crore | |||
| 5 | Janata Bank Ltd. | Around 2 lakh | |||
| 6 | South East Bank Ltd. | 1.61% of profit | |||
| 7 | Eastern Bank Ltd. | N/A | |||
| 8 | Marcantile Bank Ltd. | ||||