Home ›› 13 Jun 2022 ›› Front
The credit card business, which gained momentum recently after recovering from the Covid-19 pandemic shock, is set to face another big blow as the government has made submission of a copy of income tax returns mandatory when applying for a card, say industry insiders.
For the upcoming fiscal year, the government has made it compulsory to submit a copy of an individual’s income tax return to enjoy 38 types of services, including applying for a credit card, a child’s admission to an English medium school and trade licence.
At present, only the tax identification number (TIN) is mandatory to apply for a credit card.
Officials say the government has made the move to help widen the tax net as the country has now 75.10 lakh TIN holders and only 29 lakh of them submit their tax returns.
At the end of March this year, the country’s banks issued 37,98,207 credit cards to their clients, according to the latest Bangladesh Bank (BB) data. The number of credit cards issued was 28,73,498 at the end of March 2021.
Syed Mohammad Kamal, the country manager of MasterCard, Bangladesh, told The Business Post that the credit card issuance rate will fall in the coming days because of this new rule.
“The decision has been taken at a time when we are talking about Digital Bangladesh and emphasising digital payment,” he said.
No other country in the world has made the TIN certificate mandatory for getting a credit card, he added.
As per the BB data, credit card transactions collectively stood at Tk 2,513 crore until March this year, which is 19.15 per cent higher than the previous month and up 40.94 per cent year-on-year.
Negative impact
Credit card use has been growing in recent times after the withdrawal of the travel ban, which was imposed at the height of the pandemic, said a senior official of a leading private commercial bank.
The official said credit card business in the international segment had fallen drastically during the pandemic when many countries imposed travel bans and it just might drop further because of the new rule.
“Moreover, this new rule will come into effect from July 1 but we still don’t know whether it will be applicable on new credit card applicants or both new and existing card holders,” added the official.
According to Eastern Bank Ltd officials, they now have around two lakh credit card users with Tk 700 crore outstanding loans on these cards. The bank offers Visa, Mastercard, UnionPay and Diners Club.
Eastern Bank’s Deputy Managing Director M Khurshed Alam told The Business Post, “The new rules will definitely impact the credit card business but it will bring positive change in revenue income for the government in the long run.”
However, Mohammad Anwar Hossain, former head of cards at Mutual Trust Bank Ltd, said the government has made the submission of income tax returns copy mandatory at a time when the credit card business of banks has only started to gain momentum.
“This will negatively impact the banks’ business,” he added.
Apart from credit cards, submission of tax returns copy has also been made mandatory for applying for a loan over Tk 5 lakh from a bank or a financial institution.
It has also been made compulsory for becoming a director or a sponsor shareholder of a company; obtaining or continuing an import registration certificate or export registration certificate; obtaining or renew a trade licence in the area of a city corporation or municipality; obtaining registration of co-operative society; obtaining or renewing of licence or enlistment as a surveyor of general insurance etc.
