Lack of a policy to repay default loans against credit cards is taking a heavy toll on default clients who allegedly face threats and harassment from the issuing banks.
Treated as consumer financing, the credit card loans are charged with high interest by the banks that have no definite policy to recover the loans.
As a result, the cardholders face problems if they default, as the banks do not allow the credit card loans to reschedule or offer any chance to pay the dues through installments favouring the clients.
Banks recover the money from credit card defaulters, allegedly issuing threats and harassing them physically and socially.
However, Bangladesh Bank recently moved on issuing a policy over credit card loans to solve the emerging problems. It has already made a draft policy in this regard.
The policy includes a clause that any verbal or physical harassment or threats to customers, their family members, references or friends shall not be resorted in the recovery process.
At the issuance of a credit card, the issuer should properly communicate with the customer about the procedure of recovery in the case of default payments.
But they should not engage in any activity against public interest and must use the principles of honesty and good health, said the policy.
The policy also prohibited banks from offering unsolicited loans to the customers based on the credit cards.
It, however, did not offer any way forward for cardholders to come out of the default situation by paying off the loans.
Though Bangladesh Bank discourages consumer financing, car loans and house building loans are allowed to reschedule when defaulted, said a senior executive of Bangladesh Bank.
The cardholders, however, are treated as any other defaulters if they fail to pay their dues in the scheduled time, but they are not allowed to get installments or rescheduling facilities to pay off the loans, he said.
He said credit card loans can be rescheduled also like other loans, following the rescheduling policy, because the nature of the credit card loan is similar to that of a regular loan.
But the banks are reluctant to go through the rescheduling process as the loan amount is not significant to them, he said.
Banks would rather prefer to recover money allegedly by forcing clients instead of following legal procedures to avoid extra hassles for the small amount of credit card loans, he observed.