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BI Considering Credit-Card Limits After Debtor’s Death
Dion Bisara | April 15, 2011

Locals in West Nusa Tenggara rallying on Friday against the central government’s Newmont bid. (Antara Photo) Locals in West Nusa Tenggara rallying on Friday against the central government’s Newmont bid. (Antara Photo)
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devine
6:51am Apr 18, 2011

Giving a certain credit limit should be the risk of the bank. If the give cards with high limit with insufficient fund then it is their fault. In my opintion BI should limit the interest that is charged. If one does not pay the full monthly bill a whooping 3.5 - 5.00% is charged. That is insane. They already make a HEFTY profit on the sales commission and exchange rate if the card is used in another country. And then, instead of beeing happy to make such hefty profits the Bank starts intimidating people.

A secure way around the problem would be the wide introduction of DEBIT-Cards where a customer only can buy as much as he has in his bank account. That option is safe both for the customer as well as for the bank.

Valkyrie
6:24am Apr 18, 2011

Peter-Link, I see you are able to criticize Timor Leste, but, unable to assimilate a simple situation.

DrDez
4:31am Apr 18, 2011

I agree Peter

However must point out that as yet there is little evidence he was murdered.


Peter-Link
9:17pm Apr 17, 2011

I need to ask - What has a Credit Card limit have to do with a guy being murdered by thugs working for City Bank?

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After the recent death of a politician exposed the hazards of credit card debt, Bank Indonesia has begun studying options to prevent lenders from offering credit lines that are too big for consumers to handle.

“What we want is for only the most eligible to get credit cards, those who have the ability to pay,” central bank spokesman Difi A Djohansyah said on Friday.

Among the ideas floated were setting maximum credit limits based on a client’s income and raising the minimum age for card holders.

“We are reviewing whether the maximum limit should be 30 percent of monthly income [as in Malaysia],” he said. “The minimum age for credit-card holders, which is 21, needs to be reviewed as well.”

Bank Indonesia does not regulate credit limits, which are set by commercial banks. The lenders offer credit lines as they see fit, based on their assessment of a potential customer’s level of risk.

This is the latest move on the part of the central bank to protect consumers after politician Irzen Octa died on March 29 after meeting debt collectors working for Citibank Indonesia. Counting a massive amount of interest, Irzen had owed the lender over Rp 100 million ($11,500) in credit-card debt. Police have named five suspects over the death.

Difi said getting credit cards was relatively easy, with only Rp 30 million of annual income needed to secure a card. According to Jakarta Globe calculations and consumer interviews, that’s often enough for a bank to issue a card with a Rp 5 million limit.

Difi said the proposed limits on credit lines would only apply to entry-level cards. “Higher-limit credit cards are usually granted only after the consumer has a good record,” Difi said.

Bank Indonesia is also weighing the minimum age for card holders. “We want to review this because consumers’ maturity can be an early indication if they are able and willing to pay,’’ Difi said.

Central bank data show outstanding credit-card debt of Rp 33.2 trillion as of February, up from Rp 30.9 trillion in the year-earlier period. The non-performing loan ratio for credit cards had declined to 4.6 percent, or Rp 1.52 trillion, over that period. The banking sector’s net interest income was not available.

Citibank Indonesia has declined to disclose its NPL ratio for credit cards.