No paying for alcohol, gambling, nightclub bills with Islamic credit cards

Bangladesh Bank has issued a full-fledged guideline for operating 'Islamic credit cards' by Shariah-based banks. Under the new guideline, these cards cannot be used at businesses related to alcohol, gambling, nightclubs, conventional insurance companies, illegal dating or matchmaking, and pork.

The guideline has been formulated with the aim of ensuring Shariah-compliant and interest-free transactions, risk management and protection of customer rights. A notification in this regard was sent from Bangladesh Bank's Islamic Banking Regulation and Policy Department to the managing directors of all banks in the country on Monday.

Currently, several banks, including Islami Bank and Al-Arafah Islami Bank, are providing Islamic credit card services.

The guideline has prohibited the purchase of Shariah-non-compliant or illegal goods and services with Islamic credit cards. To enforce this prohibition, banks must keep 'Merchant Category Codes' blocked at the system level.

These include businesses related to alcohol, gambling, nightclubs, conventional insurance companies, illegal dating or matchmaking, and pork.

If any customer makes an illegal transaction, the bank must immediately cancel the card and inform Bangladesh Bank.

Under the new guideline, banks can charge 'Ujrah' or service fees for specific services such as card issuance, renewal, replacement, network facilities and account maintenance. However, this fee cannot be increased or decreased based on a customer's dues, credit limit or delay in bill payment.

If a customer fails to pay the bill within the stipulated time, the bank cannot take any late payment penalty as its own income. However, at the time of the agreement, the customer must promise to give a specific amount to a charitable institution. That money will be deposited in a separate charity account outside the bank's main income and must be donated under the supervision of the Shariah committee.

Before activating the card, the customer's consent must be taken through a one-time password. Card-related information must also be kept confidential. The money for unauthorised transactions must be refunded within seven working days of receiving a request to block a lost or stolen card.

Additionally, 'two-factor authentication' has been made mandatory for Islamic credit cards.

Bangladesh Bank said the main basis of an Islamic credit card will be 'Qard Hasan' or interest-free loan and 'Ujrah' or service fee. It cannot be used as a source of income for the bank based on the customer's loan, like conventional credit cards. At the same time, instructions have been given to ensure that customers do not spend beyond their means.

Any Islamic bank registered with Bangladesh Bank or the Islamic window or branch of a conventional bank can issue this card. In the case of issuing foreign currency or dual currency cards, the concerned bank must be an authorised dealer.