The LankaBangla Finance Ltd is giving its credit cardholders the same relaxations being offered by scheduled banks to customers on loan repayment due to the coronavirus shutdown.
The institution's decision was guided by the central bank's recent instructions to support borrowers in paying bills that accumulated during the general holidays put in force to curb the spread of Covid-19.
The Bangladesh Bank's Banking Regulation and Policy Department (BRPD) brought great relief to borrowers when it ordered banks to suspend interest on all loans for two months till May.
The central bank also asked banks not to charge late payment fee and compound interest on nonpayment of credit card bills. But borrowers from non-bank financial institutions (NBFIs) felt disappointed thinking it was not applicable to them.
Khurshed Alam, head of LankaBangla's retail business, told The Business Standard, "Usually, the NBFIs follow circulars issued by the Department of Financial Institutions and Markets (DFIM) of the Bangladesh Bank.
"But in this particular case, LankaBangla is following circulars issued by the BRPD of the central bank for the convenience of our cardholders."
He further said, "In compliance with the BRPD circulars, LankaBangla is not charging any late payment fees, and interest is being calculated at simple rate instead of compound rate from March 15 this year.
"Furthermore, interest for the month of April and May this year – calculated on the outstanding balance of March 31 – will be suspended and transferred to the block account until the Bangladesh Bank makes a final decision."
Leading financial institution LankaBangla has been operating the credit card business since 1998, maintaining all compliance of the credit card industry similarto the scheduled banks. Now the financial institution has 1.5 lakh card members.
The Business Standard recently published an article titled "Borrowers of NBFIs miss out on interest payment suspension."
In that article, a credit cardholder of LankaBangla Finance had said he was charged Tk6,000 interest against his previous month's outstanding amount of Tk1.59 lakh. He felt very embarrassed after hearing about this discrimination.
The Bangladesh Bank has issued the instruction on loan interest of banks only. But, how will the card holder understand that the instruction is not applicable for non-bank finance institutions?
In this connection, Khurshed Alam said, "The cardholder was charged Tk6,000 on his last month's bill (based on April 30 this year) and the BRPD circular was issued on May 4. So, it was not possible to stop charging interest before April 30.
"LankaBangla suspended collecting interest from credit cardholders for two months (April and May) based on the outstanding balance on March 31. If any cardholder had already paid this type of interest, then he or she will be entitled to a refund."