Dhaka:Bangladesh Bank has released its inaugural set of operational guidelines for Islamic credit cards, prohibiting banks from obtaining additional revenue from customer debts or delayed bill payments.
According to United News of Bangladesh, the newly issued directive allows banks with Islamic banking services to issue Taka-denominated cards, provided they hold Authorised Dealer licences for foreign or dual-currency cards.
The guidelines classify all credit purchases, cash advances, and delayed payments as 'Qard Hasan,' meaning interest-free loans. Banks are not permitted to charge profit or interest on these loans, but can impose fixed service fees for specific services provided. Additionally, banks are banned from using Mudarabah deposit funds to finance credit card operations.
Service charges, including those for card issuance, renewal, account maintenance, and cash withdrawals, must not exceed the bank's actual direct costs. Merchant discount commissions cannot be passed on to cardholders, with excess funds either refunded or donated to charity annually.
The central bank stipulates that service fees should not surpass the actual cost of card issuance and maintenance. Charges based on a percentage of the credit limit or outstanding balances are banned, and cash advance fees must be flat amounts.
Cardholders missing payment deadlines must donate a pre-agreed fixed amount to charity, with banks barred from recording these as income. This charity amount remains constant, irrespective of delay length.
There is a five-business-day period for cardholders to cancel their card post-approval without penalty. Banks must provide a 30-day advance notice before altering fees or terms.
Cardholders are not liable for fraudulent or unauthorized transactions, and refunds for such transactions must be issued within seven working days. Cash withdrawals are limited to 50 percent of the credit limit, and conservative credit limits are encouraged to prevent over-indebtedness.
Islamic credit cards cannot be used for purchases prohibited under Shariah law, such as alcohol, gambling, tobacco, and cryptocurrency trading, which are automatically blocked by Merchant Category Codes at the Point of Sale.
Banks must conduct annual Shariah audits and submit compliance reports to Bangladesh Bank within two months of the financial year-end, with non-compliant earnings directed to charity.