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: ďƒˇ Standard Chartered Grindlays Bank
ďƒˇ Bank Asia Ltd.
Exim Bank Ltd.
National Bank
NCC Bank Ltd.
Premier Bank
Janata Bank Ltd.
BRAC Bank
South East Bank Ltd.
City Bank
Eastern Bank Ltd.
IFIC Bank
Marcantile Bank Ltd.
Dhaka Bank
Eastern Bank Ltd.
Commercial Bank of Ceylon
Credit Card Market in Bangladesh 6. Credit Card Brands Bank Bank Asia Ltd Commercial Bank of Ceylon Exim Bank Ltd. NCC Bank Ltd Janata Bank Ltd. Marcantile Bank Ltd. National Bank Premier Bank Jamuna Bank Ltd. BRACBank City Bank IFIC Bank Dhaka Bank Dutch Bangla Bank Lt.
Credit Card Brands VISA Card MasterCard VISA Card VISA card, Master card. VISA Card Q-Cash Credit Card. VISA Card VISA Card VISA Card Q-Cash VISA Card VISA Card VISA Card VISA Card VISA Card VISA Card Master Card.
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
Bank Bank Asia Ltd
Commercial Bank of Ceylon Exim Bank Ltd. NCC Bank Ltd Janata Bank Ltd. Eastern Bank Ltd.
Marcantile Bank Ltd. BRAC Bank
City Bank
IFIC Bank
Dhaka Bank
Dutch Bangla Bank Ltd.
Types of Credit Card VISA Gold (Dual) VISA Classic (Dual) VISA Local Gold VISA Local Classic or Silver VISA Tuntuni VISA Gold VISA Classic Gold Card – Limit above 50000 taka. Classic Card (Visa) – Limit bellows 50000 taka. Silver Card (master) – Limit bellow 50000 taka. Classic Local Gold Local Gold International Only one credit card brand: Q-Cash which is a locally used credit card. No international credit card. Simple Credit Card Life-Style Card Cool Card EBL Travel Card Gold, Classic. Types of card – Local, International Dual currency card. VISA Classic : Local VISACold: Local VISA Clssic: Dual Universal Classic Card VISA Gold: Dual/ Universal Gold Card VISA Local Classic VISA Classic Dual VISA Gold Local Visa Gold Dual VISA Classic Local VISA Gold Local VISA Classic International Visa Gold International Dual Gold (International ) Dual Classic (International ) Local Gold (Only in Bangladesh ) Local Classic (Only in Bangladesh ; Limit below tk. 50,000 or more than tk. 50,000 ) Gold card – Limit above 70000 taka. Classic card (Visa) – Limit bellows 70000 taka. Silver card (master) – Limit bellows 70000 taka.
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 Number of 4500 Cardholder
31/12/2008 3500
31/12/2007 3000
31/12/2006 n/a
Number of Cardholder of Bank Asia Ltd. 5000 4000
Series1
3000
le o h rd a C
2000
Linear (Series1)
1000 0 2006
2008 Year
2010
31/12/2005 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 Number of Now total Only 800 Cardholder 3000
31/12/2007
31/12/2006
31/12/2005
Number of Cardholders of Exim Bank
3500 3000 2500
Series1
s le o h rd a c
2000 1500
Linear (Series1)
1000 500 0 2007.5
2008
2008.5 Year
NCC Bank Ltd.
2009
2009.5
Date
31/12/2008
Number of 1876 Cardholder
31/12/2007
31/12/2006
31/12/2005
31/12/2004
1730
1732
1024
N/A
Number of cardholder of NCC Bank
2500 2000 Series1
1500
l h d a fc ro e b m u N
1000
Linear (Series1)
500 0 2004
2005
2006
2007
2008
2009
Year
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 Number of Now total Cardholder 2000 members
31/12/2007
31/12/2006
31/12/2005
31/12/2007 -
31/12/2006 -
31/12/2005 -
Janata Bank Ltd.
Date 30/10/2009 Number of 157 Cardholder
31/12/2008 150
Mercantile Bank Ltd.
Date
31/12/2008
Number of 10950 Cardholder
31/12/2007
31/12/2006
31/12/2005
31/12/2004
6051
3212
N/A
N/A
le o h rd a C
Number of Cardholder in Mercantile Bank Ltd
12000 10000 8000 6000 4000 2000 0 2005
Number of Cardholder Series2
2006
2007
2008
2009
Linear (Series2)
Year
Dhaka Bank
Date
31/12/2008
31/12/2007
31/12/2006
31/12/2005
31/12/2004
Number of 6898 Cardholders
5188
5327
5177
4830
le o h rd a C
Number of Cardholder in Dhaka Bank 8000 7000 6000 5000 4000 3000 2000 1000 0 2002
Series1
Linear (Series1)
2004
2006
2008
2010
Year
IFIC Bank Ltd.
Date
31/12/2008
31/12/2007
31/12/2006
31/12/2005
31/12/2004
Number of 60000 Cardholders
Jamuna Bank Limited
Date 31/12/2008 Number of 13000 Cardholder
31/12/2007 7000
31/12/2006 5500
31/12/2005 2500
31/12/2004 Nil
le o h rd a C
Number of Cardholder in Jamuna Bank Ltd.
14000 12000 10000 8000 6000 4000 2000 0 2004
Series1 Series2 Linear (Series2)
2005
2006 year
The Premier Bank Limited
2007
2008
2009
Date 31/12/2004 Number of 3,000 Cardholder
31/12/2005 2,500
31/12/2006 2,000
31/12/2007 3,000
31/12/2008 12,000
le o h rd a C
Number of Cardholder of Premier Bank Ltd. 14000 12000 10000 8000 6000 4000 2000 0 2002
Series1 Linear (Series1)
2004
2006
2008
Year
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: Date
31/12/2008 31/12/2007
31/12/2006 31/12/2005
31/12/200 4
Bank Asia Ltd Exim Bank Ltd
Revenue (Taka )
Tk. 4 crore
Tk. 1.5 crore
Revenue (Taka )
1 crore taka (expected).
Expenditure 15 lakhs at (Taka ) the initial stage. NCC Bank Ltd Janata Bank Ltd. Marcantile Bank Ltd. BRAC Bank National Bank Premier Bank Jamuna Bank Ltd. Dutch Bangla Bank Ltd.
Dhaka Bank
Revenue Expenditure Revenue Expenditure Revenue Expenditure Revenue Expenditure Revenue Expenditure Revenue Expenditure Revenue
44614833 5204650 Tk 15 Lac Tk 35 Lac 35500000 26000000 340848639 20851669 54259894 56754082 76500000 37000000 2035666
-
n/a
n/a
This was preliminary stage so no revenue can be calculated. In this year total expenditure is 35 lakhs. 30096185 3582390 Tk 12 Lac Tk 35 Lac
15326248 6491559 -
1342042 N/A -
N/A N/A -
24874544 6117410 56110315 48952173 75000000 35000000 459600
1127 Nil 152396284 55293193 60000000 34500000 276440
128098028 32585544 65000000 42000000
54000000 36000000
Expenditure 1820000 670000 Revenue 35 lakhs taka (Expected). 75 lakhs at Expenditure the initial stage. Revenue 27000000 19000000
1380000
17000000
16500000
15000000
Expenditure
14000000
12500000
11000000
14000000
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 of NCC Bank Ltd.
Revenue and Expenditure of credit card of NCC Bank 50000000
r itu d n e p x E
Revenue of NCC Bank Ldt. 40000000 30000000 20000000 10000000 0 2004
Revenue Series2 Linear (Series2)
2006
2008 Year
2010
Expenditure of NCC Bank
r itu d n e p x E
Expenditure of NCC Bank for Credit Card
7000000 6000000 5000000 4000000 3000000 2000000 1000000 0 2005
Exp Series2 Linear (Series2)
2006
2007
2008
2009
Year
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 Revenue from Credit Card of BRAC Bank
40000000 30000000 Series1
u n v e R
20000000
Linear (Series1)
10000000
0 2007in BRAC 2008 Bank 2009 Expenditure for2006 Credit Card Year
r itu d n e p x E
Expenditure for Credit Credit in BRAC Bank
25000000 20000000 15000000 10000000 5000000 0 2006.5 2007 2007.5 2008 2008.5
Series1 Linear (Series1)
Year
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
u n v e R
Revenue from Credit Card in National Bank Ltd.
18000000 16000000 14000000 12000000 10000000 80000000 60000000 40000000 20000000 0 2004
Rev of national Series2 Linear (Series2)
2006
2008
2010
Year
Cost for Credit Card
Expenditure for Credit Card in National Bank Ltd.
Series1 Linear (Series1)
r itu d n e p x E
70000000 60000000 50000000 40000000 30000000 20000000 10000000 0 2004
2006
2008 Year
2010
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. Revenue from Credit Card
Revenue
Revenue from Credit Card in Premier Bank Ltd.
100000000 80000000 60000000 40000000 20000000 0 2002 2004 2006 2008 2010
Series1 Linear (Series1)
Year
Expenditure for Credit Card Expenditure for Credit Card in Premier Bank Ltd.
50000000 40000000 Series1
20000000
Linear (Series1)
r itu d n e p x E
30000000 10000000 0 2002
2004
2006
2008
2010
Year
Revenue and Expenditure of Credit Card in Premier Bank Ltd. Revenue from Credit Card
Revenue from Credit Card in BRAC Bank Ltd.
40000000 35000000 30000000 25000000 20000000 15000000 10000000 50000000 0 2006 Expenditure for Credit2007 Card
Series1
u n v e R
Linear (Series1)
2008
2009
Year
Expenditure for Credit Card in BRAC Bank Ltd.
25000000 20000000 Series1
10000000
Linear (Series1)
r itu d n e p x E
15000000
5000000 0 2006.5
2007
2007.5
2008
2008.5
Year
Revenue and Expenditure of Credit Card in Premier Bank Ltd. Revenue from Credit Card Revenue from Credit Card in Jamuna Bank Ltd.
2500000 2000000
Series1
u n v e R
1500000 1000000
Linear (Series1)
500000 0 2005
2006
2007 Year
2008
2009
Expenditure for Credit Card
r itu d n e p x E
Expenditure for Credit Card in Jamuna Bank Ltd.
1600000 1400000 1200000 1000000 800000 600000 400000 200000 0 2004
Series1 Linear (Series1)
2006
2008
2010
Year
Revenue and Expenditure of Credit Card in Dhaka Bank Revenue from Credit Card Revenue from Credit Card in Dhaka Bank 20000000 18000000 16000000 14000000 12000000 10000000 8000000 6000000 4000000 2000000 0
Series1
u n v e R
Linear (Series1)
2004
2006
2008 Year
2010
Expenditure for Credit Card
Expenditure for Credit Card in Dhaka Bank
Expenditure
20000000 15000000 Series1
10000000
Linear (Series1)
5000000 0 2004
2006
2008
2010
Year
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 Date Bank Asia Ltd Exim Bank Ltd
NCC Bank Ltd Janata Bank Ltd. Marcantile Bank Ltd. National Bank Jamuna Bank Ltd. Dhaka Bank Dutch Bangla Bank Ltd.
31/12/2008
31/12/2007
31/12/2006
31/12/2005
31/12/2004
Tk. 28 Lac
Tk. 25 Lac
-
n/a
n/a
70% of the total cash withdrawals through credit cards. 80 Lac
45% of the total cash withdrawals through credit cards. 60 Lac
35 Lac
20 Lac
Tk 1.32 crore
Tk 95 Lac
-
-
-
90 lac
35 lac
15 lac
11204564309 5661000
9179953111 1460000
305374736 210000
324116595
289210422
52,433 25% of the total cash withdrawals through credit cards.
15,175
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.
Date Bank Asia Ltd Exim Bank Ltd NCC Bank Ltd Janata Bank Ltd. Marcantile Bank Ltd. Premier Bank Dhaka Bank Dutch Bangla Bank Ltd.
31/12/2008
31/12/2007
31/12/2006
200
180
-
31/12/2005
31/12/2004
No card defaulters still 298 257
206
1
0
-
-
-
1
0
-
-
-
1500 754 No card defaulters still.
400 759
300 680
300 518
200
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.
lts fu e D rd a C
Number of Card Defaulter in Bank Asia Ltd.
205 200 195 190 185 180 175 2006.5
Series1 Linear (Series1)
2007
2007.5
2008
2008.5
Number of Card Defaulter inYear NCC Bank Ltd.
Number of Card Defaulter in the NCC Bank Ltd.
Card defaulter
400 300 Series1
200
Linear (Series1)
100 0 2005
2006
2007 Year
2008
2009
Number of Card Defaulter in NCC Bank Ltd. Number of Card Defaulter in Dhaka Bank Ltd. 1000 800
Series1
lt fu e D rd a C
600 400 200
Linear (Series1)
0 Number of Card Defaulter in Premier Ltd. 2004 2006 2008
2010
Year
Number of Card Defaulter in Premier Bank Ltd.
lt fu e D rd a C
Number of Card Defaulter in the Premier Bank Ltd.
1600 1400 1200 1000 800 600 400 200 0
Series1 Linear (Series1)
2002
2004
2006
2008
2010
Year
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
-
-
Expenditure (in Tk.)
Advertising Expenditure in Newspaper of Bank Asia Ltd. 3000000 2000000
Series1
1000000 Linear (Series1)
0 2006 2007 2008 2009 2010 Year
Exim Bank Year
2009
2008
Newspaper
15 lakhs
5 lakhs
Others (Please Mention)
Hand bill 1 lakh. papers 5 lakhs.
2007
2006
2005
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
Advertising Expenditure for Credit Card of NCC Bank in 2008 2000000 1500000 1000000
Series1
500000 0
Electronic Media
Billboard
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 Total
2008 94285036
2007 64649691
2006 50273749
Expenditure (in Taka)
Advertising Expenditure of BRAC Bank Ltd
100000000 80000000 60000000 40000000 20000000 0 2005
Series1 Linear (Series1)
2006
2007 Year
2008
2009
Dhaka Bank Year Newspaper Bill Board Personal Selling
2008 5 5 2
2007 10 8 2
2006 1
2005 1
2004 1
NATIONAL BANK LTD. Year
2008
2007
2006
2005
2004
Total
46179467
8370521
10940775
5936730
3448087
2004 1,00,000
The Premier Bank Limited Year Newspaper
2008 2,00,000
2007 -
2006 -
2005 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 Category
Card Annual Fees
Late Fees
Payment Excess Over Limit Fees
Classic Local
1000
200=/
200=/
Gold Local
2000
200=/
500=/
Gold International
3000
$10
$10
Dutch-Bangla Bank Ltd.
VAT
15%
Particulars
Local
International / Dual
Annual fee (customers)
Gold BDT 1500
Classic BDT 1000
Gold USD 2500
Classic USD 1300
Annual fee (Bankers) Supplementary card Excess Limit Late Payment Return Cheque Statement Retrieval fee Sale slip Retrieval Outstation Cheque collection
1500 0 250 300 50 50 100 100
1000 0 250 200 50 50 100 100
2550 500 10$ 10$ 5$ 3$ 10$ 10$
1300 500 10$ 10$ 5$ 3$ 10$ 10$
Pin replacement fee Janata Bank Ltd.
200
200
200
200
Card Fees and Charges: The following fees and charges are realized from Janata Bank Credit Card customer 500/500/500/-
1. Card fees Annual Fees Renewal Fees 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 ees and Charges 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 Engineer,
Institutions,
Doctor,
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
Mainly it depends on the monthly salary or income of the customer. Sometimes customer’s status is also taken into account. No.
Banks
1
Bank Asia Ltd
2 3
Commercial Bank of Ceylon Exim Bank Ltd.
4 5
NCC Bank Ltd Janata Bank Ltd.
6
South East Bank Ltd. Eastern Bank Ltd. Marcantile Bank Ltd. National Bank Premier Bank Jamuna Bank Ltd. BRACBank City Bank IFIC Bank Dhaka Bank Dutch Bangla Bank Ltd.
7 8 9 10 11 12 13 14 15 16
years 2007 2008 2009 Around 0.025% of the profitability of the bank
Amount
N/A 0.33%
1 crore & 10 lakh 4 crore Around 2 lakh
1.61% of profit N/A 5%
N/A 3-5% of total profit 20% 35% 4% N/A N/A .25% .50% 1% Not calculated yet Generally limit is around 1.2- 1.5 times of the income of the customer. For business people, the limit may cross 1.5 times of income depending on the level of risks. Social Status is also important issue Dutch Bangla Bank Ltd. has one internal procedure system. First they collect some information from various sources about internal, external, financial, historical and also family matters .And than rank this information out of 100.
12. Contribution of credit card to the total profitability of the organization: We can see that, Brac bank has 35% profit from credit card division which is larger than any other bank of our list because it has more card facility than any other bank in our country. In amount NCC bank has its more profit than any other bank .
13. Features to be added to address the changing need of customers No . 1
Banks Bank Asia
The bank has introduced VISA Tuntuni which has fixed limit of Tk 20,000 to meet the needs of middle income people. Issuance of checks in VISA card (already prevalent in MasterCard). Providing VISA Dual cards to more customers, rather than selected people. There is a strategy to attract plastic cards customers of other banks called ‘Soft turn’, through which the bank provides more limit. But it requires customer to surrender
2
Commercial Bank of Ceylon Exim Bank Ltd. NCC Bank Ltd Janata Bank Ltd.
They are coming with all latest facilities in the card.
3 4 5
6 7 8 9 10 11
12 13
South East Bank Ltd. Eastern Bank Ltd. Mercantile Bank Ltd.
Features
smartly purchase any product N/A VISA Membership New ATM Booths installation Network creation Network sharing Minimum payment of monthly credit by customers will be 5% from current 8%. Additional establishment of POS (Point of Sale) At the moment, the bank is not moving towards implementing any such features or innovation. N/A Hajj card will be launched soon. A special type of prepaid card for students is going to launch soon.
National Bank N/A Premier Bank • Chip based card • EMV card Jamuna Bank Pre-paid card Ltd. Gift card Hajj Card Travel card BRACBank N/A City Bank Variable Interest Rate EMI Plan Balance Transfer
Round the clock cash withdrawal facility at any Visa branded ATM throughout the world Round the clock purchasing power for goods and services at any Visa branded POS outlet 24% interest on Cash Advance No cash Advance fee at CITY ATMs Lowest Annual/Renewal Fee International Roaming facility Internet Transaction* Convenient Repayment option E-statement Limited Lost Card Liability Secured with your Photo – Photo Card
14
IFIC Bank
15
Dhaka Bank
16
Dutch Bangla Bank Ltd.
24 hours customer service help desk According to the changing need of customer City Bank is launching MS card which will provide all types of facilities to its customers. Eligible customer’s monthly income must be at least 70,000 taka. User flexibility More attractive interest Convenience balance transfer facilities Round the clock purchasing power for goods and services Internet Transaction Limited Lost Card Liability Ensuring more safety by using finger print Reward point (usage discount) Discount or renewal fee Joining fee 0% interest [15-45 days interest free time period if purchased by credit card ] smartly purchase any product
From the above figure it is evident that , all banks are interested to facilitate purchasing power of the customers, they are interested to provide special facility for hajjis whilst a great no. of banks are not interested to add any new special facility in their credit cards. 14. Usage discount: No. 1
Banks Bank Asia Ltd
2
Commercial Bank of Ceylon
3 4 5 6 7 8
Exim Bank Ltd. NCC Bank Ltd Janata Bank Ltd. South East Bank Ltd. Eastern Bank Ltd. Mercantile Bank Ltd.
9 10 11 12 13 14
National Bank Premier Bank Jamuna Bank Ltd. BRACBank City Bank IFIC Bank
Discounts Usage discount varies around 3%- 20% of usage amount. Discounts for customers in purchase or buying in corporate partners It will be determined on the basis of the company strategy and performance. Still they have no usage discount N/A So far no such usage discount has been provided No such discount given Heavy discount on their products and services On the basis of the payment condition up to 100% interest is discounted to the valuable customers N/A N/A Not available N/A N/A If the employees of IFIC Bank use these cards, they do not have to pay any charge for first year. In second year they will get 50% discount from their yearly charge. IFIC Bank comes to a contract with Reliance
15 16
Dhaka Bank Dutch Bangla Bank Ltd.
Insurance ltd that the employees of Reliance insurance are not required to pay annual charge for first year if they use credit card of IFIC Bank ltd and also they will get 50% waiver of their annual charge in 2nd year. The user of credit card will get 15% discount in peak season and 40% discount in off peak season if they stay PRASAD PARADISE in Cox’s Bazar. No discount yet Still they have no usage discount
From our list, six banks are not providing any usage discount to the customers, five banks don’t provide any answer for this question because they are reluctant about the facility. Only IFIC and Mercantile banks are different because IFIC is providing a lot of usage discount and Mercantile bank is providing 100% interest rate discount to the valuable customers on some conditions. This situation can be figured in the following figure:
15. Prospect No.
Banks
Prospects
1
Bank Asia Ltd
2
Commercial Bank of Ceylon
3
Exim Bank Ltd.
4
NCC Bank Ltd
The Bank has got good prospects. In 2009, it is in the 2nd position behind only Standard Chartered Bank. All the branches perform credit card operation; mainly more response from divisional districts. As their numbers of customers are increasing, they are expecting that, this credit card division will be successful. With VAT, purchasing power, GDP growth, company revenue as well as domestic production is increasing. As the revenue of the bank from the credit card division is increasing gradually and it contributes a huge amount to the total profitability of the organization, so the prospect of this division is well
5 6
Janata Bank Ltd. South East Bank Ltd.
7 8 9 10 11 12 13
Eastern Bank Ltd. Mercantile Bank Ltd. National Bank Premier Bank Jamuna Bank Ltd. BRACBank City Bank
14
IFIC Bank
15
Dhaka Bank
16
Dutch Bangla Bank Ltd.
enough. Prospect of this department is not well enough. Single Card – Dual Use (Local and International) Widely accepted at Merchants and ATMs worldwide Competitive annual/renewal fee 50 days interest free credit facility 50% card drawing facility at ATMS and any SE bank branch SMS Push-Pull service 24 hours customer service etc N/A It’s Prospect is bright N/A Very good Very effective in future N/A Future prospect of the bank credit card is very attractive. In response to the customer’s increasing demand, the bank is going to launch MS CARD where only sophisticated and high income class people are eligible for it. The growth of their number of customer is also satisfactory. The bank has launched its VISA card in 2007 and since then it has experienced a tremendous growth in number of customers and in revenue. To capture higher market share by offering special featured of credit card With VAT, purchasing power, GDP growth, company revenue as well as domestic production is increasing.
As people of Bangladesh are becoming digital in all sectors, they are using more and more credit card facilities now-a-days. The world of banking has introduced a new world with different facilities in Bangladesh which makes Bangladesh digital means modern. From our listing banks’ scenario we can say that with Bangladesh peoples upgrading life banks’ profitability as well as credit card usage is also increasing with the concerned division success.
16. Constraint
No. 1
2 3 4 5
6
7 8
9 10 11 12 13
14
Banks Bank Asia Ltd
Constraints There is an age limit for customers (21-61 years). Bank doesn’t issue credit cards to applicants outside this limit. If applicant’s net income is low, then bank doesn’t provide credit card. Some business persons change their address and never lets bank know. In business person’s aspect, bank gives more priority to reference to track them. Bank tries to avoid customers having risky profiles. Some professionals are avoided (police, lawyers etc) Commercial Bank Over loan tendency of the people of Ceylon Tendency of making delay in payment. Lack of consciousness about using the card. Exim Bank Ltd. Govt. imposes vat on the card. People are not aware of this type of transaction. High designation must be needed to get credit card etc. NCC Bank Ltd None Janata Bank Ltd. No central database system. For efficient and effective operation strong technical support is must. No core banking software. No separate Credit Card Department. It is operated under the Business Development Marketing Department. Lack of manpower in operation, marketing and recovery section. Communication and media problem. Have to maintain credit card operation centrally. South East Bank The bank does not have any ATM machines, which is their Ltd. greatest weakness. They only act as issuers, not acquirers. Lot of players already exists in the market but even then the bank is following conservatism strategy. Eastern Bank Ltd. N/A Marcantile Bank Penetrating markets is difficult. Ltd. Good repayment behavior is rare. CIP, VIP are already existed cards. Most of the people have very low electronic knowledge National Bank Nil Premier Bank Technology is not still developed across the country Jamuna Bank Ltd. Nil BRACBank Nil City Bank Although the bank has a good number of customers, Bank has found difficulty in schooling their customer how to use these cards. POS machine are not adequate Imposition of additional 15% vat discourages customers. As it is very risky product and no collateral is required, Bank needs to be very cautious in customer appraisal procedure. IFIC Bank Limited number of ATM booths POS machine are not adequate
15
Dhaka Bank
16
Dutch Bangla Bank Ltd.
People are not familiar with the use of this technology Imposition of additional 15% vat discourages customers. As it is very risky product and no collateral is required, Bank needs to be very cautious in customer appraisal procedure No Push-Pull service (SMS) Chaque book, Credit Card etc. are not provided yet. Conservative approach in assigning limit Govt. imposes vat on the card. People are not aware of this type of transaction. High designation must be needed to get credit card etc.
As people of Bangladesh are becoming digital in all sectors, they are using more and more credit card facilities now-a-days. But because of various constraints people as well as banks are facing problems to use this more. We can make a clear picture in our mind about these problems from the above figure.
17. Marketing Strategy
Marketing Strategy No. 1
2
Banks Bank Asia Ltd
•
The bank has a conservative marketing strategy. It doesn’t provide cards whoever comes. It provides cards only after ensuring full security.
•
Advertisements are only done in newspapers. But more emphasis is put on personal selling i.e. providing cards to people bank’s employees know. Generally, bank follows the KYC (know your customer) approach. • No aggressive approach. • Advertisement will be published in the newspaper soon. • Corporate level program about the card will be started soon (with their all corporate client). On line advertisement, office to office direct marketing, Encourage the high designation people by giving Email as well as business man. Traditional festival based discount on usage Door to Door Approach
Commercial Bank of Ceylon
3
Exim Bank Ltd.
4
NCC Bank Ltd
• • • • • •
When the bank starts its full operation (planned 2010), it will 5 Janata Bank Ltd. provide credit card services through branches. • Branches will be given set targets of no. credit card issuance periodically. • Bank plans to set up POS in different areas. SE bank’s marketing strategy and focus is limited to specific group of 6 South East Bank target customers. They are very strict and rigorous in issuing credit cards. Ltd. • 80% of their total card base are bankers, • 10% are businessmen issued through other branches, • 8% are other organizations and • 2% are other miscellaneous businessmen. None 7 Eastern Bank Ltd. • No push sell. 8 Marcantile Bank • Not too liberal • Tough assessment Ltd. • Low interest • Occasional discount. None 9 National Bank • Not available enough marketing strategy including lower 10 Premier Bank advertising and only selling the card through direct sales executive. • Convincing the existing customers of JBL by branch 11 Jamuna Bank Ltd. employees. None 12 BRACBank 13 City Bank 14
IFIC Bank
• • •
Increasing number of profitable customers rather only increasing the number of customers Targeting to attain almost 15% growth in every year in revenue from credit card Increasing number of ATM booths for ease of customer
It is not important to discuss anything here because of the figure’s clearness. NOTE: Here, to make charts we have used only most popular and larger number of points in figuring all figures because at time of adding all points figures become clumsier. So to make charts we use conservative and “clear to see” approach. CONCLUSION Paper money and coin are risky and burdensome for carrying. 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 There are many business centers which do not give card facilities causing troubles to the cardholders. The most disadvantage of the card is that all the people wishing to be cardholders cannot enjoy card facilities because of ceiling-touch income bracket along with other criteria, only a certain section of people fulfilling criteria can be cardholders. A versatile, reliable credit card processing service can help business increase sales by enabling you to accept all forms of payment from anywhere at anytime. Credit card debt has increased steadily. As the card debt is increasing day by day so the default risk is also increasing. To minimize this risk people have to self-restrict to make expenditure. They should not take debt to such that amount which will be like burden to them. Appropriate rules and regulation is also needed to minimize this default risk. BIBLIOGRAPHY
Information collected from different banks. Web site of mentioned banks. News papers. Text book