CBM raises annual credit card rates to 20pc

The Central Bank of Myanmar (CBM) has raised annual credit card interest rates to 20 percent from 13pc as it wants to control unsecured lending operations, an official from the CBM told The Myanmar Times.

The CBM announced that banks can charge a maximum of 20pc in interest rates on credit cards on April 24.

“The usage of credit cards falls under unsecured lending. Credit card acquisitions are considered high-risk so we want to control and make it more systematic,” said Daw Than Than Swe, director general from the CBM’s Financial Institutions Supervision Department.

Credit cards can be considered a type of interest-free loan, assuming users repay within the stipulated period of 45-50 days, depending on the issuing bank.

The CBM sets a maximum lending rate of 13pc on collateral-based loans. Up until last month, the annual interest rate for late credit card payments was also 13pc, drawing a rising volume of credit card holders.

However, many users still fail to pay their credit card bills within the interest-free period and banks often issued announcements urging credit holders to settle their debt.

“By credit card or by ordinary loans, the problem of late repayment exists around the world. This issue is also faced by almost every bank in our country. What we can do is find solutions to minimise credit card debt. In the past, the interest rate for late repayments was 13 pc, which is the same as the lending rate for loans with collateral. The CBM increased the rate maybe because credit card loans are without collateral,” said U Zeyar Aung, head of card department of CB Bank.

Currently, the number of people using credit cards in Myanmar is between 500,000 and 600,000, of which 20pc-25pc incur late payment charges, according to U Zeyar Aung’s estimates.

“CB Bank has about 50,000 credit card users. About 25 pc of them fail to repay their credit card debt within the deadline,” said U Zeyar Aung.

The CBM this year began to issue more loans without collateral with the objective of reaching out to larger volume of borrowers. Uncollateralised loans have a maximum interest rate of 16pc.

Source: Myanmar Times

To see the original article click link here

NB: The best way to find information on this website is to key in your search terms into the Search Box in the top right corner of this web page. E.g. of search terms would be “property research report”, ”condominium law”, "Puma Energy", “MOGE”, “yangon new town”,"MECTEL", "hydropower", etc.