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Bank Indonesia Sets New Rules On Credit Cards
Dion Bisara & Muhamad Al Azhari | January 09, 2012

Bank Indonesia makes changes on credit card rules in a bid to reduce defaults among consumers. (Agency Photo) Bank Indonesia makes changes on credit card rules in a bid to reduce defaults among consumers. (Agency Photo)
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Normalaatsra
12:31pm Jan 11, 2012

I've just turned 16, and now BI extends it's minimum age limit to 21? Now instead of one more year to get a credit card, I now have to wait 5 years...

takeo
5:32pm Jan 10, 2012

Here they charge around 40% interest. I was laughing at them. I decided to take a credit card to be able to take advantage when offers arise, but I pay back 100% at the end of the month.

You won't believe how the banking employee looked at me when I demanded 100% payback every month... priceless.

I can only believe this year will be full-on for the banks to spread as many credit cards as possible to get as many people under the "old law" as possible...

gnulab
10:23am Jan 10, 2012

It's good the BI starts to control the interest rate. That way less collusion occuring among the banks.


danchh
8:54am Jan 10, 2012

I hope BI consider the 'uncontrol' credit card 'mall-marketing' too in their new regulation. They're just doing "marketing" without explaining the 'side-effect'of using the card or how to use it wisely. It worries me many people will miss-use the card, then they can't pay the debt, then they got bitten. And death becomes the last option to pay the debt.

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People seeking credit cards will face stricter controls and banks will face a limit on the charges they can levy under regulatory changes spelled out on Monday by Bank Indonesia.

The banking industry applauded some of the measures, but raised concern over central bank attempts to impose a maximum interest rate.

Puji Atmoko, the central bank’s head of payment system regulation, said that as part of the new regulation credit card holders must be at least 21 years old, higher than the current minimum age of 17.

BI also set the minimum monthly income at Rp 3 million ($330) and the maximum credit limit at three times monthly income. People who earn less than Rp 10 million a month are allowed only to get credit cards from two issuers.

“This is meant to make customers wiser in using credit cards as a payment method ... so that the use is in accordance to their ability to repay [the debt],” BI said in a statement. Banks must comply with the new regulation by Jan. 1, 2013.

Indonesia’s credit-card business has expanded significantly in the past few years as more people become comfortable with using credit cards to make payments and as the number of middle-income households rises.

According to BI data, credit-card transactions increased to Rp 163 trillion in 2010 compared with Rp 73 trillion in 2007. In the first 11 months of 2011, these reached Rp 147 trillion.

The central bank wants to educate Indonesians on how to use cards so they avoid being trapped under mounting debts that could cause non-performing loans in the banking sector to increase.

BI also wants to make sure customers are not burdened by high interest rates and plans to set the maximum rate that banks can charge card holders.

The new regulation did not set a specific figure, but Ronald Waas, a deputy governor for payment systems, has said that BI wants lenders to charge a maximum 3 percent per month for their credit-card loans. Banks now charge as much as 3.75 percent in interest on the product.

The other change involves a prohibition on using credit cards to pay for goods purchased through loans. In a bid to ease consumers’ debt burden, BI also prohibits fines, administrative costs and interest charges other than those levied on the principal debts.

BI will also set new debt collection standards, though banks can still outsource the service. It prohibits debt collection to be done using violence or accompanied by verbal threats. Last year, a Citibank Indonesia customer died at a Citibank office amid debt collectors’ efforts to retrieve the funds owed.

Sigit Pramono, the chairman of the Indonesian Banking Association (Perbanas), said he believed that banks would not complain about the new rules.

“I don’t think banks will be complaining about a stricter control for credit cards. That helps them to reduce non-performing loans. What I don’t think is necessary is BI interfering in the interest rate,” he said.

“Interest rates are banks’ business. They will give rates based on their own consideration. It is too much if BI wants to interfere in that area.”