The foreign exchange crisis in Bangladesh has dealt a blow to credit card users as the sharp appreciation of US dollar against taka has narrowed their scope for foreign purchases through cards.
Industry insiders say the amount of USD that can be spent using credit cards has decreased mainly due depreciation of local currency against the American greenback. Almost all major currencies have gained significantly against taka in the last one and a half years amid the significant depletion of foreign currency reserve.
For instance, dollar traded at Tk 110 on Sunday, up from Tk 106.60 on the same day last year and Tk 85.20 in 2021. A client who uses a credit card issued by Eastern Bank Ltd said availability of dollars against his credit card has declined recently.
The private commercial lender communicated this to him earlier this month, saying the decreased amount is due to higher taka-USD conversion rate. However, the total assigned limit will remain unchanged, it said.
The notice warned the card-holder that if the USD outstanding exceeds the new limit, a fee might be imposed automatically. A credit card user of Mutual Trust Bank says he has already crossed his credit card transaction limit due to higher conversion rate.
The two are among a huge number of credit card-holders who go abroad regularly and purchase products in US dollars and have been impacted by the weak taka. EBL has already requested the central bank to raise the credit card loan limit. In 2017, the Bangladesh Bank doubled the limit to Tk 10 lakh.
EBL, one of the leading players in the credit card segment, has around two lakh card-holders and its outstanding loans against the cards stand at Tk 750 crore.
"Credit cards are generally issued with a taka limit and clients can use foreign currencies within the same ceiling," said a senior banker.
He says Bangladeshi nationals are allowed to spend a maximum of $12,000 outside of the country through credit cards or in cash. But card-holders are now able to use a lower amount of US dollars because of the higher exchange rate.
EBL's credit card business in the international market has fallen due to higher currency conversion rate and airfares, he said. However, credit card use domestically has increased owing to an erosion of the purchasing power of consumers in recent months amid higher inflation, bankers say.
Inflation advanced 23 basis points in August to 9.92 percent propelled by food inflation, which hit a 12-year high, data from the Bangladesh Bureau of Statistics showed. Consumer prices have remained at an elevated level for more than a year.
Ahsan said purchasing products or paying bills using credit cards gives some breathing space to people at a time of economic crises. "So, this is high time to increase the credit card loan limit since the existing ceiling is not enough for clients considering higher inflation and the USD rate."
The private commercial lender has 1.17 lakh cards in the market, which places it among the top five players in the segment. Despite the higher exchange rate, the number of credit card-holders and the amount of transactions is growing.
