Beginning of Credit Card in Bangladesh
ANZ Grindlays Bank (Now merges with Standard Chartered Bank) started issuing both MasterCard and Visa branded local currency (BDT) Credit Card in January 1997. But in 1988 it started acquiring MasterCard within limited hemisphere. This was the first if its kind in Bangladesh to use foreign cards as foreigners had to rely on. In early 1997 National Bank Limited started issuing MasterCard branded credit card for both Local and International type. Since the beginning NBL issued cards by imprinting and embossing few features on the imported plastic cards in its own house. This unique in house service enabled it to deliver the cards to its customers within 24 hours from the very beginning. This technological facility by this time has become common because gradually market has expanded through creating 17 card issuing Financing Institutions. Among these card issuers only three institutions are creating seventeen card issuing Financing Institutions. Among these card issues only three institutions are principal members of MasterCard and the rest are issuing Visa Cards.
Now in Bangladesh there are three types of credit cards- Local, International and Dual card. Basically these are of two status- Silver Card and Gold Card status.
Credit Card in National Bank Limited
The global technological advancement has immense influence to ease the lifestyle of human being. Credit Cards are vital components of electronic fund transfer and may be deemed as ‘Plastic Money’ which provides smarter and secured way of life. Apart from carrying hard cash, people are now a day very much used to bear cards that give them comfort and also giving the flexibility in their daily transactions in Shopping Mall, Hospital, and Clinic etc.
National Bank Limited is issuing International, Local and Dual Credit Cards.
National Bank pioneered to introduce credit Cards in 1997 among the Local Banks under Principal Membership of Master Card International. In 2003, the bank also got the Principal Membership of Visa International and introduced another worldwide popular brand known as Visa Card in our country.
Later in 2006, National Bank introduced Prepaid Card, which is known as NBL Visa Power Card. The Power Card is also issued as International, Local and Dual.
In Bangladesh approximately 3,50,000 Credit Cards are being used in more than 5000 merchants/shops/service provides by facilitating exchange of millions of taka every day. National Bank has now become a giant card authorization bank in Bangladesh. This Bank is the principal member of Master card & VISA card.
NBL has a large family of card division. This division consists about 54 employees and 9 different sections. Card holder of NBL is increasing day by day. The Organogram of NBL Card Division is given below:
Credit Card Management Process
There are nine steps of Credit Card Management Process. They are shown below—
Profitability of Card Division is directly correlated to number of cards i.e. more cards more profit. NBL issue cards at nil security to the Bankers, Govt. Employees, MBBS Doctors, University Teachers, various service holders of reputed private organizations who get handsome salary. NBL also issue cards to the reputed businessman having own house in Metropolitan cities, District towns, Upazila towns etc. Customers having handsome income, own house in the cities/ towns and own car get priority at the time of perusing credit worthiness. How far a customer is traceable is also a prime condition of card marketing. Card marketing strategy may be categorized as under:
1) Direct Marketing by Card Division Employees:
All the Executives/ Officers if the Card Division is deployed for Card Marketing against a target allocated to them in addition to their desk assignments and the same is monitored and evaluated by Head of Cards from time to time. This process continues round the year.
2) Marketing of Cards through NBL Branches:
All the NBL branches are deployed for card marketing against a target allocated to them and is monitored and evaluated by Card Division from time to time. This process continues round the year.
3) Marketing of cards by engaging Direct Sales Agents (DSA) on contract basis:
Card Division also deploys countrywide Direct Sales Agents on contract basis for card marketing. DSA gets remunerations for their achievements as under:
I. Monthly salary (TK 7,000) plus Commission per card (TK 750) if he/ she achieve a certain number of cards (known as Monthly Target) as fixed by the bank.
II. He /she gets only Commission per card in case of non- achievement of certain Monthly Target.
Monthly Salary, Commission per card and monthly target are ascertained subject to approval of the Competent Authority.
It may be mentioned here that the Incentive as Commission per card is also applied for the Bank’s employees as and when requires to boost up card marketing subject to approval of the Component Authority of the bank. Card Division undertakes various marketing Campaigns round the year at the time of different festivals like Eid-ul-Fitr, Eid-ul-Azha, Bangla Naboborsha etc.
Credit Cards Authorized By NBL:
NBL use two brands of card.
Categories of Credit Card:
NBL provides three categories of cards. They are-
In Single Currency Local Cards the sentence ‘Valid Only in Bangladesh’ is printed. In Local Cards credit limit is given in Bangladesh Taka (BDT). Local card has five years expire time period. Cardholder has to pay annual charge in every year.
There are two types of Local Card.
|Types||Minimum Amount||Maximum Amount|
|Silver Local||TK 10,000/-||TK 45,000/-|
|Gold Local||TK 50,000/-||Above|
Necessary Papers & Documents for Local Cards:
i. For the Service holders—Copy of Salary Certificate, Official ID.
- For the Businessman—Copy of Trade License.
- 2 Copy P.P Photograph of Applicant.
- 1 Copy P.P Photograph of Guarantor.
- Photocopy of National ID card of Applicant.
- Photocopy of National ID card of Guarantor.
- TIN Certificate of the applicant.
- Statement of Bank Account for last 6 months, it is required for all.
- Income, Assets & Liability Statement/Self Declaration etc.
- In case of Director of Limited Company Board resolution needs to be submitted.
- Undated Cheque favoring National Bank Limited (It’s not mandatory)
- Copy of Utility Bills (If Cardholder lives in own house).
Fees & Charges:
|Annual Charge (Gold)||Tk 1500/- + 15% VAT = Tk 1725/-|
|Annual Charge (Silver)||Tk 700/- + 15% VAT = Tk 805/-|
|Minimum Payment||5% or Tk 500/- Whichever is higher|
|Cash Advance Fee||2% or Tk 100/- Whichever is higher|
|Interest||Purchase: 2% Per Month on daily basis|
Cash Advance: 2.5% Per Month on daily basis
|Interest Free Time||Pay in full within the payment due date & enjoy a free credit facility from 15 to 45 days. This is not applicable in case of cash withdrawals.|
|Replacement Card (Gold)||Tk 500/-|
|Replacement Card (Silver)||Tk 250/-|
|Late Payment Fee (Gold)||Tk 300/-|
|Late Payment Fee (Silver)||Tk 200/-|
|PIN Re-Issue Fee||Tk 500/-|
Local card has three types of transactions as like
ATM means Automated Teller Machine. Total limit of ATM Booth is Tk 50,000/- Customers can withdraw 50% of his/her total limit. For an example—If any Cardholder has limit of Tk 50,000/-. He/she can withdraw 50% of Tk 50,000/- =Tk 25,000/-
ATM Booth charge is 2% or 100 whichever is higher. This charge is incurred per month on daily basis. In this case interest charge is 2.5% per month on daily basis.
A cardholder can withdraw highest TK 20,000/- in a day. He/she cannot withdraw more than Tk 20,000/- whatever is his limit. Cardholder can use all ATM Booth, which is consists of Visa or Master Logo except Dutch- Bangla Bank ATM Booth. It charges Tk 10 for per transaction. There is no charge if anyone withdraws from NBL ATM Booth. But if any cardholder uses Standard Chartered Bank or City Bank ATM Booth he/she has to pay Tk 100 for per transaction.
II. Pay Order:
Pay order is another way of withdraw cash from credit card. There is no vat in pay order. Customers can receive 80% of total limit with 1.5 % service charge. There is an opportunity of enjoying interest free time. There is a minimum 15 days and maximum 45 days free interest time period. There is a statement cycle to measure this time period.
|Name of cycle||Statement Date||Payment Date|
This cycle is measured from card no. Visa and Master card consists of 16 digits. Visa card number starts with 4 and Master card starts with 5. Suppose,
So, here consider 7 number digit of credit card number as name of cycle. Here 5 is the name of cycle.Normally there is a difference of 15 days from statement day to payment day.If any cardholder is late to payment from the statement date, free time will decrease. On the other hand if anybody clears his payment before his/her statement date he will enjoy more interest free time.
Cardholders can take 100% of purchase price. Employees of Rangs Industries Ltd, Singer Bangladesh ltd, Electra International, Transcom Ltd, Grameen Phone, Robi, Bangla link, City Cell & Warid Telecom get 50% waiver on annual charge if they provide NBL a “Letter of Comfort”.
International Card is used in abroad. In International Card credit limit is given in United States Dollar (USD). It has highest limit of $6500 and lowest limit of $500.
Fees & Charges:
|Annual Charge (Gold)||$35+15% VAT = $40.25|
|Annual Charge (Silver)||$20+15% VAT = $23|
|Minimum Payment||5% or $25 Whichever is higher|
|Cash Advance Fee||2.5% or $3 Whichever is higher|
|Interest||Purchase : 2% Per Month on daily basis|
Cash Advance: 2.5% Per Month on daily basis
|Interest Free Time||Pay in full within the payment due date & enjoy a free credit facility from 15 to 45 days. This is not applicable in case of cash withdrawals.|
|Replacement Card (Gold)||$15|
|Replacement Card (Silver)||$15|
|Late Payment Fee (Gold)||$10|
|Late Payment Fee (Silver)||$10|
|PIN Re-Issue Fee||$10|
In case of Dual Card the limits (Local & International) are encoded in a single plastic having no earmark on it. Local segment is for using in Bangladesh and International segment is for using in Bangladesh and International segment is for outside Bangladesh. In no situation Local segment can be used in abroad and International segment can be used in Bangladesh. Also there is no option for transfer of balance across the segments.
TQ means Travel Quota. TQ Cards are issued to the Bangladeshi adult citizens having valid passport. As per Bangladesh Bank guidelines a Bangladeshi Citizen is entitled to spend a maximum USD 6,500 in a Calendar Year for traveling abroad. Out of USD 6,500 he / she may spend maximum USD1,500 in SAARC countries and Myanmar and USD 5,000 in rest of the world. At the time of delivering the Cards, allocated limit is endorsed in the passport of the respective cardholder.
Necessary Papers & Documents for TQ Cards:
In addition to the requirements as mentioned in Local Cards the following papers to be obtained for issuing TQ Cards:
i. Personal Travel Quota Undertaking form duly signed by the Cardholders
ii. Photocopy of the relevant page/s of Passport (1st five pages, endorsement page/s).
Photocopy of the relevant page/s of Passport (1st five pages, endorsement page/s).
The highest limit of travel quota is $6500.
This amount is provided yearly. A cardholder has to pay in BDT. But if the limit amount exceeds, the rest amount is paid in USD Dollar. For an example—
For Saarc Country one can get $1500. But if he/she spends $1700 he/she has to pay extra $200 in USD Dollar.
If the total amount of travel quota is not used in the particular year it will automatically update in next year. On the other hand if cardholders don’t pay the amount it will hold till next year; it will not be updated.
RFCD means Resident Foreign Currency Deposit. People who are living continuously six months in Bangladesh whatever he is a Bangladeshi resident people or not can open RFCD account. Maximum limit of the RFCD account is $5000. RFCD account is applicable for
|Visa||Gold + Silver|
Necessary Papers & Documents for RFCD Cards:
In addition to the requirements as mentioned in Local Cards the following papers to be obtained for issuing RFCD Cards:
i. Confirmation of lien on the balance of RFCD Account is obtained from the concerned bank/branch where RFCD Account is being maintained.
- Photocopy of 1st five pages of the Passport.
RFCD Cards are issued against lien on the balance of RFCD Account. Any Bangladeshi resident at the time of his/ her return from abroad may carry any amount of foreign currency subject to declaration to the Customs Authority in the FHJ Form. He /she can also carry maximum USD 5,000 or equivalent foreign currency without any declaration every time he/she arrives in Bangladesh from abroad. He/she can deposit such foreign currency in his/her RFCD Account and Cards may be issued against such Accounts. Any bills of RFCD have to be paid from RFCD Account. RFCD Account is mainly used for hotel booking, online purchase and so on.
RQ means Retention Quota. If anybody needs USD for business purpose he/she needs to maintain RQ account. Bangladesh Bank provides draft for RQ account. As well as payment should be done by the draft of Bangladesh Bank. There are three issued cards against RQ. These cards have to issue from same bank.
Necessary Papers & Documents for RQ Cards:
Additionally to the requirements as mentioned in (1) Local Cards the following papers to be obtained for issuing RQ Cards:
i. Export Performance Certificate to be obtained from the concerned bank where RQ Account is operating.
ii. Confirmation of lien on the balance of FC Account of the Exporting firm to be given by the concerned Bank/Branch of the exporter. The same Bank/Branch also need to confirm that no other Card/s has been issued against lien on the same FC Account.
iii. Photocopy of 1st five pages of the Passport.
iv. Corporate guarantee on Non Judicial Stamp (TK 150).
v. Board Resolution on company’s pad.
Up to nine Supplementary cards may be issued against a basic Local Card out of which one card is free of charge. There is no separate credit limit for the supplementary cardholders but they avail the limit under the basic card.
Power Card is like prepaid card. Here cardholder can use his/her own money. Only VISA is applicable for Power Card. Cardholders deposit their money and withdraw according to amount. There are sixteen digits in a Power Card. There is no link of power card with the personal account. Currently NBL has 25,688 Power Cardholders.
Local Card (Power Card) has five years expire time period. Cardholder has to pay annual charge in every year. He/she can take highest Tk 30,000/- in one day. In between he/she can receive Tk 20,000/- from the ATM Booth. It charges Tk 10 for per transaction. There is no charge if anyone withdraws from NBL ATM Booth. But if any cardholder uses Standard Chartered Bank or City Bank ATM Booth he has to pay Tk 100 for per transaction.
The whole process and maintaining of Power Card is monitored by ITCL Company. NBL provides data about cardholder to ITCL. ITCL is responsible to solve problems which are occurred in Power Card.
- Provides easy access to customer’s money from ATMs.
- Fast, convenient and safe way to pay for purchasing goods and services from different merchant outlets.
- PIN based transaction secures customers interest
Necessary Papers & Documents for Power Card:
On the basis of security coverage, NBL’s Delegations are categorized at different level as under:
- In- charge of card Division: 100% covered by approved security
- Additional Managing Director/Deputy Managing Director:
a) Local Card Limit up to Tk5.00 lac without security
b) International Card limit up to USD 6,500 without security.
- Managing Director: Up to limit TK 10.00 lac or equivalent USD without security.
a) Local Card Limit up to Tk5.00 lac without security
b) International Card limit up to USD 6,500 without security.
After receiving the Applications along with necessary documents/papers (TIN, National ID, PG, Authorization letter from branch) Officers of Card Proposal Section examine whether the information given in the form are in order and documents/papers are enough to meet requirements or not. They also reconsider the credit limit recommended by the Marketing Team and submit proposal to the competent authority for approval of the card.
Proposal is the 2nd step of card division. After collecting file that should be written in a prescribed way with—
- Applicant’s Name
- Applicants Details
c) Organization/ company’s name and address
d) Nature of Business
e) Residential Address
f) Permanent Address
- Branch/ bank name
- Application Source
a) Details of card type, requested limit of cardholder, name and profession of the PG.
b) Description about Applicant’s take home salary or annual income, bank statement, details about immoveable assets.
c) Authorized Official declaration about the file.
d) Depiction about card type and final set up limit.
e) Certified Officials signature.
Security Conformation of Proposal
- Conformation lien of RFCD, FC, SB A/C, CD A/C, FDR related bank from associated branch for RFCD/RQ category card.
- Undated blank cheque.
- Reporting to Bangladesh Bank about TQ Card, RQ Card and RFCD Card.
- Prime responsibility to safe- in the securities of the cardholder in the form of FDR, letter of Undertaking from any bank.
There are two types of proposal. They are—
i. Non Secured Proposal:
Which application forms not having enough security (Undated blank cheque favoring NBL, FC) are considered as Non Secured Proposal. First of all papers are checked and strength is measured by official/s. Finally the proposal note along with papers is placed for kind approval towards Board Committee or delegation of DMD. After completion checking authority confirms limit and arrange a file. To conclude approved file is forwarded to system department for embossing card.
ii. Secured Proposal:
Secured Proposal has proper information with security against issuing card. Here security is ensured by banking norms. For branch approaching card, cardholders have to have account in that branch. Especially the applicant having advance a/c with respective bank’s branches treats as high priority for getting approval as the security held against the credit lines are tagged with sanction of the approval card. After checking all documents and fixing limit file is send to system department for embossing card.
In case if the card is lost or stolen Cardholder/s brings it to the knowledge of Proposal section for immediate deactivation. The card is replaced upon written request of the Cardholder against a replacement fee. Then authorities solve problems and keep a renewal note. The card also may be replaced for other reasons such as counterfeit, damage, faulty magnetic stripe etc.
At first a card’s limit is fixed according to the strength. Card Division proposes to cardholder to enhance limit using the card after long time period. Sometimes cardholder also proposes to enhance limit. For Enhancement respective persons of Proposal Section issue an enhancement note according to justification. They regard as credit history, card longevity, and security to boost up limit.
A credit card can be cancelled. Sometimes cardholder surrenders his/her card by writing an application and paying all dues. Conversely NBL also cancel card because of overdue or unsecured card. Proposal Section release security like encash the FDR or receives money from Guarantor or blank cheque and issue ‘No Objection Certificate’ to cardholder for cancellation.
Change of Security
Cardholders have option to change security. They can change security as well as guarantors. For that they inform to NBL then Proposal Section issue note, update into system and arrange file. Often cardholders ask for waiver against card. NBL check card usage and payment history. Cardholder sends an ‘Acknowledgement Letter’ to Card Division. Authority can approve or decline the letter.
PIN means Personal Identification Number. Cardholders need PIN to withdraw money from ATM Booth. But at first NBL not provide PIN. Cardholders have to apply for PIN.Proposal Section gives card no. to system and gets PIN. They delivery PIN to particular cardholder or send it to respective branch.
System is the most crucial part of Card Division. Mainly all tasks are generated and maintained in system. NBL use software named Card Pro (Version 5) which origin from Malaysia. System use Card Pro to run their work. In Card Pro software there are six parts. They are—
- (APM) – Application processing Management
- (CPM) – Cardholder Profile Management
- (CAM) – Credit Authorization Management
- (CAR) – Card Account Receivable
- (MAP) – Merchant Account Payable
- (CSM) – Customer Service Screen
Card Pro Screen is shown below:
Mainly Marketing and Proposal are under issuing. NBL card itself act as issuing part. When any NBL card is punched in NBL’s POS Machine it performs as issuing.
Merchant is under acquiring. When any NBL card is punched other bank’s POS Machine then NBL stands for acquiring part to that bank.
At present in Bangladesh National Bank Limited, Brac Bank Limited, Dutch- Bangla Bank Limited, Prime Bank Limited and Standard Chartered Bank Limited are both Issuing and Acquiring Bank. Rests of them are only issuer bank.
The authority of VISA Card and MasterCard control the whole system via SITA. In Bangladesh there is a connection of SITA from where all banks are attached. When any transaction incur by NBL card the data will reach to VISA Card or MasterCard through SITA.
In this figure we can see the system process of credit card. Here NBL is connected with VC or MC through SITA. All issuing banks of Bangladesh are connected with SITA. SITA has a connection with VC and MC. When any cardholder swaps card in abroad that acquiring bank (HSBC) will inform to VC or MC. The data will put into issuing bank’s server through SITA. Only issuing bank (Southeast) is connected with SITA. They don’t have any POS Machine. Acquiring banks (DBBL, NBL, Prime) have POS Machine which are connected with sever.
Mainly NBL provides two types of supports. These are—
Authorized persons of System look after the software and hardware. They use software named SUN which is reviewed by Oracle. SUN watch over different parts which are—
- Application server—3 units which mechanism is (1+1)+1 (redundant testing)
- Database Server—4 units which methods is (1+1)—Clustered,1—Pure Backup,1—Testing
- Storage Device
- Tape Drive
- HSM (Hardware Security Module)—HSM is for PIN Verification
- NAC (Network Access Controlled)—NAC is for control POS Machine
- ii. Logical:
For logical support NBL use Sun Enterprise Authentication Mechanism software by Oracle.
Correspondence with VISA Card and MasterCard
NBL have to follow VISA Card and MasterCard instruction at any time at any situation. They offer update on their program twice in a year (Usually in April and October). They fix up a specific date to update program. NBL bound to update program on that particular date. Otherwise VISA Card and MasterCard authority charge penalty against delay.
Software Vendors & Local Vendors
SUN is the software vendor of NBL. Prime Bank and Standard Chartered Bank are local vendors of NBL. When any kind of problems crop up NBL need suggestion from them.
System monitors all process. NBL make available 24 hour’s service for cards. They check all system whether it runs correctly or not. If any server remains down they take immediate action to resolve the problem. All equipments of Card Division are maintained by System Cell.
Fraud Control Monitoring
Fraud may be two types as—
i. Issuing Fraud:
If anyone makes two cards with same card no that will consider as an Issuing Fraud. In the same way if same data enclose in two different cards it will consider as Counter Fraud Card. To get away from this problem NBL confirms highest security. There is a CC camera in embossing room. All cannot get access there for ensure safety.
- ii. Acquiring Fraud:
Cardholder may be loose card. If anyone stole that card and can use that will be an Acquiring Fraud. NBL monitors Merchant all time for control fraud. If fraud increases in any merchants NBL will cancel agreement with that Merchant.
Retrieval Request Monitoring
If any card proves as fraud, issuing bank insists sales slip from merchants. If sales slip does not match with actual transaction history, issuing bank demand for charge back from acquiring bank.
VISA Card or MasterCard Chargeback
If any card claims fraud in Bangladesh, NBL will mutual it with acquiring banks. As an example we can say NBL demands sales slip/ evidence to Prime Bank if any NBL card regard as fraud in Prime Bank’s POS Machine. In this circumstance both banks try to make understand between themselves. They will not inform to the authority of VISA Card or MasterCard.
Sometimes fraud card may exist in abroad. If any NBL card declares as fraud card NBL informs to VISA or Master. Then authority will check to acquiring bank. Moreover they will make sure card information and signature. After checking if cardholder will prove as fraud he/she will be responsible and has to pay back. Differently if mistake makes by bank, acquiring bank will penalized.
Customer & Merchant Support
NBL provides customer support from System. All enquires, problems are met up here. There is a 24 hours hot line service. Usually Customers look forward about their bills, payment dates, and current limits and so on. In case of International Card, the card remain deactivate from system for security. So when any cardholders go abroad and want to use credit card he/ she has to inform to system. Then international portion remain open.
As well as different problems of merchants like caution on merchant, cancelled or closed merchants are controlled by system. System provides merchant support on different situation.
Data Capture & Card Embossing
From customers file all data are captured in system. Customer’s name, Father’s name, Mother’s name, Spouse name, Residential address, Office address, telephone no, limit are written down. After putting all information software system will deliver card number according to types of cards.
Card embossing is a sensitive part. There are two machines. One is for reload data and another for picture. That machine is called a photo printer. Clients photo scan here. A credit card has cardholder’s name, photo, and signature. There is a security bar code.
Download & Upload
NBL’s card may swap in other banks POS machine and other bank’s card swap in NBL’s POS Machine. NBL keep record of that. They download list of cards which are charged in other’s POS machine. End of the day they check report. On the other hand if other bank’s cards are punched in their POS Machine they upload a report on VISA Card or MasterCard server.
NBL check log after a certain time. They ensure that how many of NBL cards charge at how many places. Mainly log checking is for abroad transaction. Systems note a list of them.
Authorization is a daily job for system. There is an Authorization process of Grameen Phone. GP is the merchant of NBL. GP roaming bills are paid through credit card. Everyday GP send a list of roaming bills to NBL. The list consists of customer’s name, organization name, phone number, amount, date. Then certified person put this information manually into software. If card number starts with 4 it is a VISA Card or if 5 that is a MasterCard. For VISA Purchase Transaction code is P=Purchase transaction and for Master Purchase Transaction code is R= Retail Sale. System gives an approval code. Abruptly any card may decline for exceed limit, expired card or inconsistent expiry date.
QMR (Quarterly Monthly Report)
VISA and MasterCard incriminate a particular portion to NBL for every transaction. NBL submit a Quarterly (After every three months) report to them. If NBL fail to meet up the target which is assigned by VISA or Master, they bound to pay fines.
Quarterly Monthly Report
PIN Generation & Mailer Delivery
When cardholders swap cards in any POS Machine they need PIN (Personal Identification Number) which is security code. NBL provides PIN from system. A cardholder has to submit an application for PIN. They can collect PIN from Card Division or respective branch. System set card number into software and gets PIN.
End of day Report Checking
End of the day a report is settled down from software. Daily merchant settlement, posting lists state as a report everyday on 10 p.m.
Globally Credit Card is known as unsecured loan. It is issued in consideration of social and financial status of the clients. Sometimes cardholders become delinquent and NBL need to take initiative for recovery of the overdue amounts.
At first NBL try to get back money from cardholders through telephone calls. Secondly they send a reminder letter just after the Dunning Date. It is a soft way to alert cardholder. When limit exceeds of card or Recovery Cell cannot make a contact over phone they send an alarming letter. If NBL fail to collect money from cardholder they will inform to guarantors who is bound to pay money instead of cardholder. Sometimes NBL convert the security (cheque, FDR) as cash. NBL discharge interest and late fee after 12 months. In that case the file will put into reserve section and take action. If Cardholder has dues in International Card he/she has to pay in USD. But Card Division Authority may permit to pay in BDT. Recovery cell maintains a cycle to find out cardholder’s payment time. A cardholder has to payback within 15 days of his/her statement. That cycle and procedure is shown below—
|Card pro Cycle||Statement Date||Auto Pay Date||Payment Due Date||Dunning Date|
There are four ways of collecting money from Cardholders which are—
i. Recovery through Card Division:
Card Division has Recovery Cell. The employees working in the Cell are directly engaged in Recovery of the delinquent cards through personal visits and telephone calls. They contact to the Branches, Guarantor/s, and Reference/s of the delinquent cardholders if necessary for recovery purpose. One employee of Recovery Cell is assigned with 500 Cardholders (regular and delinquent) to handle.
- ii. Recovery through Branches of NBL:
Since NBL also issue cards on the basis of the recommendation of Branches and if such Card/s becomes delinquent, CD takes help of the respective Branch/es for Recovery
- iii. Recovery through Third Party Recovery Agents:
If the efforts of Recovery Cell do not work anymore NBL deploy Commission based Third Party Recovery Agent/s for recovery of the delinquent cards. Commission is paid to the agent/s on the recovered amount. Individual shadow file of the delinquent cardholder is handed over to the agent for their necessary action. Such commission based Third Party Recovery Agents are appointed with the approval of the Competent Authority of the bank. NBL give up the file of delinquent cardholder to agents. Agents move door to door to catch cardholder and collect money.
- iv. Recovery through Court Cases:
In case of failure of all the efforts mentioned above NBL go for Court Case against delinquent Cardholders with the compliance of Bangladesh Bank’s and National Bank’s instructions. If any complain proves in Bangladesh Bank against cardholder they will cancel all accounts in different banks made by the Cardholder. If Bangladesh Bank sues against Cardholder he/ she will unable to take any kind of loan from other banks.
NBL cards may swap in abroad. System prints out a Log list after every 1 hour and give it to Recovery Cell. Then Recovery checks out the cardholder’s whole information (limit, dues, payments, validity, transactions place, date and time, amount). If information is correct they put a message on system software.
NBL make available Insurance facility for all kinds of credit cards. They construct a report consists of—
Types of Insurance
There are two types of insurance policy followed by NBL. They are—
Between these two types of Insurance, Fraud or Forgecy Insurance Policy is common and Death Risk Insurance Policy is applicable for only air accident.
NBL has co insurance internally agreement with two Insurance Companies.
Eastland & Progoti Insurance Companies has a correlation with NBL. They look after NBL’s cards. A card has two years of insurance validity. Any cardholder claim against his/her card within two years. In case of International card if anybody claims NBL will send a report to VISA or Master. They will investigate the card’s details and send papers to NBL. After that NBL also send papers to Insurance Companies. They will also investigate on behalf of NBL. If fraud is proved by cardholder he/she will be charged or gets back if fraud is made by acquiring bank.
NBL provides various reports to Management, Regulatory Authorities (like Bangladesh Bank, National Board of Revenue etc.) as per Circular/s, upon specific instruction.
Bangladesh Bank’s CIB section preserves all banks credit information. CIB indentifies defaulter of different banks. If any customer needs loan from any bank he/she has to submit a clearance from CIB. So CIB monitors customer’s loan profile. Bangladesh Bank gives a borrower code to NBL to avoid same information about cardholder. NBL keep well-run monthly with CIB. In future NBL will send up to date information on weekly or daily basis through online. NBL maintains a CL status with time period and provision. That is given below—
Overdue Period after Expiry
|0 to 3 months||Unclassified (UC)|
|4 to 5 months||Special Mentioned Account (SMA)|
|6 to 9 months||Substandard (SS)|
|10 to 12 months||Doubtful (DF)|
|12 months plus||Bad and Loss (BL)|
NBL reports cards detail information (Cardholder’s name, address, and limit) on 1st month. Later on NBL inform about payment status. In case of payment status NBL consider upto 6 dunning period. If cardholder fails to pay in dunning period they will enlisted in SS (Sub Standard). NBL send a SS report to CIB which consists—
|Name & Card No.||Address||Date of Issue||Date of Expiry|
After SS, NBL wait for next three months. If they not get any payment clearance from cardholder SS file put in DF (Doubtful). Cardholder has to pay within this period otherwise DF put into BL (Bad and Loss).
In SS, DF and BL stages Recovery send reminder letter to cardholder. If cardholder clear dues file go under RE (Re Schedule)
It is observed that percentage of Classified Loan (CL) against credit card is around 10 in Bangladesh. It is preferred to keep the classified loan below 10% to run the card business in a profitable manner. To minimize the provision amount against the above CL, higher percentage of interest, late payment charge and mark up to be realized as supportive tools for this business.
Now a day’s different technology has come to change the living attitude of people. Peoples are adopting new technology to make life easier, comfortable and convenient. Currently people do their shopping through the credit card. They make their payment through credit card. Different big shops, shopping mall, hospital use POS (Point of sale) machine through which customer can swap their card and fulfill their payment. POS machine is also called as Online Machine. It is very sophisticated and workable within a network environment, which is known as POS network. At the present this system is well-liked between the customer and businessman. Different banks provide POS Machine in different shops. These shops are merchants to banks.
Besides card issuing National Bank Limited also acquire card transactions (VISA and MasterCard) through designated merchants across the country. NBL has also introduced this system in credit card management process. Currently they have 2,000 merchants all over the country. They provide POS Machine in those shops and get a particular commission for each transaction. NBL follow some steps in Merchant Acquiring/ Merchant marketing. These are described below—
NBL create merchants through two procedures. Sometimes they maintain a good relation with famous shops to make their merchants. They explain about their service, benefits which they are providing to merchants. If the party is satisfied and willing to become a merchant of NBL they inform to the bank. According to the procedure they become a merchant of NBL. On the other hand if anybody wants a POS Machine of NBL they directly contact with the respective person of Merchants (Card Division, NBL). Then the management collects the sales volume data, place and other information about the shop or organization. If that information is satisfactory then they will give a POS machine to them and make them a merchant of NBL.
Merchant Creation & Site Visit
To become a merchant of NBL the party has to fill up a merchant creation form which contains—
- Merchants name and address
- Contact person name and address
- Charge Privilege:
The merchant agrees to permit a cardholder to charge the purchase of goods and services normally sold by him. The merchant acknowledges that any purchase from it by the cardholder creates a direct obligation on NBL to pay it and the Merchant will not bill the Cardholder directly. Merchant agrees that the prices charged to cardholder will not exceed prices charged to the general public.
- Acceptance of charges:
NBL may accept all charges slips/ sales slip in order to make payment to merchant. They charge commission based on sales volume. It can be more than 2% or less than 2%. Usually they take 2% commission. The rate may vary from merchant to merchant. But it will not exceed about 3%. Both issuing and acquiring bank accept commission.
- Submission of charges:
The Merchant agrees to submit all valid charge slip/ sales slip forms incurred by cardholders to NBL on a regular basis.
- Payment of charges:
NBL agrees to pay charges received at their office within 7 days of receipt. Other than NBL reduce time on basis of negotiation with party.
NBL will not responsible for any claims, demands, actions, suits and proceedings, liabilities, losses, costs, expenses, legal fees or damages of merchant.
The merchant agrees to display stickers and to maintain promotional material supplied from time to time by NBL.
- Cheque cashing, cash advances and cash refunds:
NBL will not responsible for any cardholder’s cheque enchasing, cash advance or cash refunds unless a specific agreement is entered into with the Merchant.
- Transfer of ownership:
The rights obtained under this agreement are not assignable or transferable without written past approval of NBL.
- Alternations of terms and conditions:
NBL has the full power to make any change at any time. Such changes, additions, alternations, deletions or modifications will be binding on the merchant.
Authorized person of Merchant (Card Division, NBL) visits different shops and organization and observe the current selling situation on which basis NBL install a POS Machine. If the shop is big enough or party requires 2/3 POS Machine at a time NBL will provide that. In that case different POS Machine has different Terminal ID to identify POS Machine.
POS Machine Installation
After completing the merchant creation formalities and site visit Merchants team will go and install the POS Machine. It incurs Tk 20,000-25,000 to set up a POS Machine.NBL collect these POS Machines from Aamra Technology Limited. Aamra Technology Limited brings these POS Machine from Hyper Com which is an American Company. Here Aamra Technology Limited plays a role as third party. They will get Tk 140 for per POS Machine/ Terminal from NBL. Aamra Technology will be paid on daily basis. Currently POS Machine is used through two ways like—
i. T&T Phone:
If there is a TNT Phone line in shop, POS Machine is connected with the phone. So when a customer swap card the data automatically comes in the system of NBL.
- ii. GPRS:
Today’s GPRS system is also popular. People can use mobile sim too. It works same as T&T Phone. When a transaction take place in any merchants outlet NBL get a report with transaction data through software.
Manual Machine Set Up
There is another machine of NBL is called as Imprinter Machine. It is also called Manual Machine. Those parties who have not enough sell per day they use Imprinter Machine. It incurs low cost than POS Machine. Sometimes merchants keep both POS Machine and Imprinter Machine. Imprinter Machine is the alternative of POS Machine. Usually merchants use POS Machine. But when a problem arises in POS Machine then they use Imprinter Machine. Any other Imprinter used by the merchant which is not provided by NBL must be one that can accommodate VISA and MasterCard charge slips/ sales slip.
Merchant Payment process
Payment process is important for Merchants. Average 200 (100= MPS, 100= Credit Advice) merchant payment is fulfilled everyday. Some Merchants receive payment weekly or monthly. But most of them receive on daily basis. There are two types of payment process. They are—
MPS means Merchant Payment Slip. Those merchants who have no account in National Bank Limited they receive MPS everyday. MPS contains three parts—
- Office Copy
- Bank Copy
- Merchants Copy
Everyday’s transactions are recorded in NBL software. Then after next day morning they print out MPS. There are four assigned people who deliver those MPS to respective Merchants. They deliver MPS on area basis everyday. Merchants receive MPS with signature. They collect their copy and return the rest of two parts. MPS consists of Merchants name, address, transaction amount, transaction date & time. Merchants have to keep every MPS till one year. When bank claim against any transaction they have to show them MPS. This acts as an evident. Merchants bound to return MPS against any claim of NBL.
II. Credit Advice:
If any Merchants maintain a bank account with National Bank Limited they receive payment from their particular branch. On this case Card Division make a Credit Advice on behalf of that merchant to particular branch. After that Merchants accept their payment from that branch. Merchants section scans those Credit Advice and mail to that specific branch.
Some valued Merchants (like—BRAC Aarong, Robi, Westecs, Gremeen Phone, Vasavi) wish for daily statement. Then NBL make a statement on daily transactions and send to them. These merchants recheck statement with their POS Machine history. They ensure with their stock that how many goods are sold and paid throughout POS Machine.
Occasionally foreign cards are punched by POS Machines in Bangladesh. On that case NBL check that card through software named Chip Bin. (BIN= Bank Identification Number). There are two categories of checking fraud. They are—
- VISA Card:
If that is a VISA Card NBL collect BIN from Visa Online. The web address is www.visaonline.com
Then they find out the origin of card and inform the issuing bank.
Sometimes BIN is called Business ID in VISA Card.
- Master Card:
There is a manual of Master Card. Every assigned agent of MasterCard has manual. So when NBL find a fraud in MasterCard they collect BIN from manual. From BIN they also collect three numbers which are—
- Fraud Number
- Authorization Number
- General/ Principal Number
Sometimes BIN is called ICA in Master Card.
NBL find out approval code. They make a chart similar to this—
|Card No||Merchant name||Transaction date||Amount||Approval Code|
Then they will fax or email to those numbers. MasterCard authority will check it and back a report on this case.
If any cardholder claims against his/her card, NBL will inform to the merchant. Then NBL want sales slip. After getting those slip NBL check with system. If there is an error NBL will solve that. If NBL get money, they will inform to issuing bank of that card. Additionally if issuing bank will get payment, they claim to NBL for fund.
Acquiring Business Expansion
NBL keep a good relation with their merchants. They involve in promotional activities. They give pens, mug, umbrella, calendar etc as to merchants. NBL try to get more merchants as well as expand their business. As an example we can say at first any shop demand for one POS Machine. Day by day if sell increases, merchants order more POS Machines to NBL. On occasion NBL also offer Merchants more POS Machine to expand their business.
Top 20 Valued Merchants of NBL
Accounting procedure is based of transactions against card usage, which is on the other hand depended on two separate environments. NBL do business both by issuing and acquiring (accepting card transecting through their selected shops/service provider) Local & International Cards.
NBL is the recognized member of VISA Card and MasterCard. So NBL has to pay a charge to them. NBL is both issuing and acquiring bank. After a certain cycle NBL send bill to cardholders and they have to pay dues and NBL cut up a service charge which is an income for Card Division. Moreover interest and late fee is also income for them. On the other hand cardholders purchase goods from NBL’s merchants through swapping cards. Merchants request NBL for payment. After checking all transactions NBL make payment to merchants.
Accounts Section mainly deal with these tasks which is elaborately given below—
Preparing Merchants Settlement Voucher
Everyday Accounts Section make credit voucher of MPS (Merchant Payment Slip). Different merchants keep transaction in different branches of NBL. When NBL receive money it will be posted on credit voucher and when pay it will be posted on debit voucher. Accounts Section put credit no serially from IBCA (Inter Bank Credit Account) on credit voucher. When NBL acquire cards through selected merchants in Bangladesh they pay to merchants accordingly following their electronic or manual request. NBL follow the procedure below—
Bills Purchased A/c ——————————————————–Debit
Bills Payable A/c or Credit Advice to Respective Branch ————Credit
NBL collect daily Extracted Inward Data from Bangladesh Bank’s clearing and recheck the amount with that data.
Maintaining Settlement Account
In case of Local Currency Cards issued by banks other than NBL, they get the payment through an electronic system settled in a A/C with a Local settlement Bank, wherein they have to maintain the Settlement Account for transaction settlement purpose those occurs at intra- country level. At the same time when NBL’s Local Cards acquired by other acquire in Bangladesh the settlement occurs through like this—
Settlement Account —————————-Debit
Respective Bills Purchased A/C ————–Credit
Every bank has a settlement account with another bank. National Bank Limited has settlement account with Trust Bank Limited. When any cardholder swap DBBL’s card in NBL’s ATM, DBBL will deposit money in Trust Bank’s account. After that Trust Bank deposit that money into NBL’s account.
When the whole cycle is settled NBL get bill as payment from the cardholder through cash/cheque or via branch and they get credit advice from branches and credit the Cardholders A/c as follows—
International Credit Card A/c ———————-Credit
For the dollar draft they reconcile with International Division (ID). ID gives BDT amount which is equivalent that particular USD amount.
For Power Card, Official of Accounts Section matches the amount of credit advice with deposit of online branches on the basis of date. If the amount is not matched Card Division will inform that respective branch.
NBL has ten ATM Booths. Among these eight located in Dhaka, one is in Bogra and another one is in Mymensingh. Individual branches get a list from Card Division of loading money in ATM Booths. Account Section monitors the procedure through ITCL Software.
Preparing Report & Ledger Posting
LBC means Local Bills for Collection. Accounts Section keeps daily income and expenditure records. They monitor daily transaction which is related with Card Division. Every day they maintain debit and credit in excel sheet. By keeping debit or credit transactions they can know the profit or loss of that month.
After Preparing LBC Report all accounts are posted into Ledger Account.
Cardholders can withdraw money against credit cards. Those cardholders maintain a bank account with NBL will inform to respective branches. Then branches send a credit advice to Card Division. On the other hand those cardholders who don’t maintain bank account with NBL will issue a pay order. Cardholders can take different amount but not more than 80% of limit.
After checking available limit official of Accounts prepares a credit advice along with credit no, date, branch, cardholder’s name and amount. Accounts keep an office copy and send another to branch. Afterward cardholder can withdraw money from branch against credit card. If any cardholders not have available limit or it exceeds 80% of limit they cannot withdraw money from credit card.
Card Division charges 1.5% of requested amount which is considered as NBL’s income.
Maintaining Int’l Credit Card
When NBL’s International Credit Cardholders purchase goods/ services in abroad by using the card, the transaction is processes through electronic procedure maintained by VISA Int’l & MasterCard Int’l globally. NBL set out the following procedure—
Card A/c ——————————-Debit
F/C Adjustment A/c ——————Credit
ISIS & NNSS Settlement for VC & MC
ISIS means Integrated Service for Intra Country Service and NNSS means Nation Wide Net Settlement Service). ISIS prepares for payment of MasterCard and NNSS prepare for VISA Card.
Keeping Nostro Account
Nostro Account is like settlement account. NBL maintain a Nostro Account with J.P Morgan Chase Manhattan Bank. NBL do all payments of MasterCard in J.P Morgan Chase Manhattan Bank. Both NBL and MasterCard have an account in that bank. So J.P Morgan Chase Manhattan Bank plays a third party role.
Finally NBL settle Nostro A/c like follows—
F/C Adjustment ————————————-Debit
Foreign Bank A/c ———————————–Credit
Suppose any NBL cardholder swap card into any UK Merchant’s POS Machine. That merchant maintains bank account with Lloyds Bank. In this case Lloyds Bank will get money from National Bank Limited. But they don’t maintain account with NBL. Both Lloyds Bank and NBL have account in J.P Morgan Chase Manhattan Bank. So Lloyds Bank will inform to J.P Morgan Chase Manhattan Bank and they will collect money from NBL. After that J.P Morgan Chase Manhattan Bank give it to Lloyds Bank. Here J.P Morgan Chase Manhattan Bank maintains a settlement account with both National Bank Limited and Lloyds Bank which is known as Nostro Account.
Bills and Payments
Credit Card bills are generated on the basis of cycle. In a card bill, among other necessary information minimum payment amount, total amount due, last date on payment etc. are mentioned. Cardholders have option (a) to pay minimum amount, (b) to pay any amount greater than minimum amount but less than total amount due or (c) to pay total amount due. Option (a) & (b) within last date of payment exempts charging of late penalty but apply interest, option (c) within last date of payment exempts charging of both the late penalty & interest. If cardholders pay less than minimum amount it does not qualify the bill payment and late penalty and interest will be applied.
In case the cardholders maintain account with National Bank Limited and they give instruction for auto debit of their bill from the designated account, respective branches arrange to send their bill to Card Division. In this case Card Division sends an Auto Pay List to the concerned branches where the designated account is being maintained.
Card Division doesn’t receive any cash amount from cardholders. NBL take delivery of payments in four ways—
Card Division receives cheque from cardholders. Then they collaborate with other banks by Bangladesh Bank’s Nikash software. Currently 72 banks involve in inter transactions through Nikash. NBL give data entry along with Account Type (Bank/ Branch, Issue Date), Cheque Series (Local/ International), Cheque Number, Cheque Type (SB, CB, and Pay Order)
If Billing Section collects any Dollar Draft from cardholder they send it to International Division (ID) of National Bank Limited. After that International Division collect USD from respective bank through Nikash.
The full meaning of IBCA is Computerized Inter Branch Transaction. If cardholders pay local card’s payment they collect a payment slip from Card Division. Then clear dues in branch through that payment slip.
ETC means Computerized Inter Exchange Transaction. When cardholders disburse International Card’s payments they show up payment slip or International card’s bill and branch issue a credit advice. Later on Billing Section credit their amount and post a message of receiving payments in particular cardholders file.
Consecutive two months failure to pay at least the minimum amount automatically blocks the card to use.
Embossed cards with mailer (Cardholders name, address, details of card) keep in Card Delivery Section. Customer himself/herself collects card from here. Sometimes assigned people of cardholder can collect card.
There are two types of cards- one is new card and another one is renew or replacement card. Card Division inform to customers for collecting card. Cardholder put signature on receive form and then NBL active the card for use. For activation of card they use Card Pro. The process of activation of a card is given below—
Official of Card Delivery also provides an Advice Letter and brief idea about card to customer. Different terms and conditions of using cards, procedure of using card, card limit, payment details, and hotlines numbers are given on Advice Letter.
This section fix limit amount for endorsement of passport. Then put a seal of endorsement on the last page of the passport.
For the more betterment in credit card management process NBL can take some perfect principles which are as follow as a sort of recommendations:
Introduce Online Banking: NBL should introduce full online banking. So that Card Division can communicate with other branches easily. As well as cardholders can make payments more conveniently.
Records keeping system: Filing and record keeping system of the card division should be modernized.
Development & Training: Training is the key factor for development of the manager’s skills. Banks should have a regular training and development program so that managers do know every risk matter about credit card and assessment techniques.
Build up Co-ordination with others related Division: Banks moves by a team effort. So strong co-ordination with the related divisions and departments is very important.
Adequate information & Documents: Adequate information and documents should prove in the proposal so that Managers can make their decision with a very minimum time.
Insurance Coverage: insurance coverage should obtain for every funded and non funded credit facility. So that in case of uncertainty and damage like fire, strike, riot etc. banks and customer can save themselves form financial losses.
Analysis of Market Situation: At the present time Credit Card becomes a prestigious issue among private commercial banks. Many banks have introduced Credit Card with different features. So NBL should come to know new features and policy and indentify their lacking. They should cope up with distinctive features and policy.
Follow-up and monitoring: Credit quality depends on close follow-up and monitoring of loans. The follow-up and monitoring of loans is not strong here. As a result Special Mention Accounts and deteriorating credit are increasing day by day.
Develop Customer Banker relationship: Today is the time for relationship banking. For better performance customer satisfaction is very much important. So, Bank should develop the relationship with the customer.
Motivating the employees: Employees are the heart of the organization. Employees of National Bank are not satisfied with their organization. So it is a big threat for the bank. Management should try to take necessary step to motivate the employee.
As bank do work as a financial institution. Card Division is definitely an important sector of a bank. From the above analysis of NBL’s card management procedure, it is easily imagine or predicted that the card division’s position will be stronger than now because it is increasing day by day to support new project and activities of credit card.
The card market is gradually expanding to better prospect including debit cards having an investment of millions of taka. Passing through various regulatory bindings, market constrains and technological drawbacks the industry is running with hundreds of expert bankers, technologists, engineers and skilled manpower to make it more fruitful. We expect the continuous cooperation from regulatory authority and all concerns for making a smooth gateway of expanding this industry by realizing the global electronic economic environment and assure more transaction to be formal, traced and documented in a vibrant economy.
National Bank Limited has already a strong position in this sector but they need to improve more to be more efficient and sincere in this sector in improve itself as well as the nation’s future.