Credit card is a very common instrument for our day to day life, it is known as plastic money also. At present in Bangladesh most of the private commercial banks offer the credit cards to there customers, but still it remains question how many of them are aware about the credit card.

A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services. The issuer of the card creates a revolving account and grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user.

A credit card is different from a charge card: a charge card requires the balance to be paid in full each month. In contrast, credit cards allow the consumers a continuing balance of debt, subject to interest being charged. A credit card also differs from a cash card, which can be used like currency by the owner of the card. Most credit cards are issued by banks or credit unions, and are the shape and size specified by the ISO/IEC 7810 standard as ID-1. This is defined as 85.60 × 53.98 mm (3.370 × 2.125 in) (3-3/8 × 2-1/8 in) in size. Credit is a method of selling goods or services without the buyer having cash in hand. A credit card is only an automatic way of offering credit to a consumer. According to Encyclopedia Britannica, "the use of credit cards originated in the United States during the 1920s, when individual firms, such as oil companies and hotel chains, began issuing them to customers." However, references to credit cards have been made as far back as 1890 in Europe. Early credit cards involved sales directly between the merchant offering the credit and credit card, and that merchant's customer. Around 1938, companies started to accept each other's cards. Today, credit cards allow you to make purchases with countless third parties. At presents credit cards comes from different format with different limit. And the card holders have the choise of purchase through the card from his own country as well as through out the world. Credit cards were not always been made of plastic. There have been credit tokens made from metal coins, metal plates, and celluloid, metal, fiber, paper, and now mostly plastic cards. In 1950, the Diners Club issued their credit card in the United States. The Diners Club credit card was invented by Diners' Club founder Frank McNamara and it was intended to pay restaurant bills. A customer could eat without cash at any restaurant that would accept Diners' Club credit cards. Diners' Club would pay the restaurant and the credit card holder would repay Diners' Club. The Diners Club card was at first technically a charge card rather than a credit card since the customer had to repay the entire amount when billed by Diners Club. The another type of plastic card is debit card. The basic difference between the debit card and the credit card is, by the debit card one may withdrawl the amount which is available to their account but in case of credit card one may withdrawl the amount which is sanctioned by the bank without the availability of the certain fund.

American Express issued their first credit card in 1958. Credit cards were first promoted to traveling salesmen (more common in that era) for use on the road. By the early 1960s, more companies offered credit cards, advertising them as a time-saving device rather than a form of credit. American Express and MasterCard became huge successes overnight. At present The City Bank in Bangladesh distribute and maintain the American Express Credit card. Bank of America issued the BankAmericard (now Visa) credit card later in 1958.

Credit cards are issued by a credit card issuer, such as a bank or credit union, after an account has been approved by the credit provider, after which cardholders can use it to make purchases at merchants accepting that card. Merchants often advertise which cards they accept by displaying acceptance marks – generally derived from logos – or may communicate this orally, as in "Credit cards are fine" (implicitly meaning "major brands"), "We take (brands X, Y, and Z)", or "We don't take credit cards". When a purchase is made, the credit card user agrees to pay the card issuer. The cardholder indicates consent to pay by signing a receipt with a record of the card details and indicating the amount to be paid or by entering a personal identification number (PIN). Also, many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet, known as a card not present transaction (CNP).

Electronic verification systems allow merchants to verify in a few seconds that the card is valid and the credit card customer has sufficient credit to cover the purchase, allowing the verification to happen at time of purchase. The verification is performed using a credit card payment terminal or point-of-sale (POS) system with a communications link to the merchant's acquiring bank. Data from the card is obtained from a magnetic stripe or chip on the card; the latter system is called Chip and PIN in the United Kingdom and Ireland.

For card not present transactions where the card is not shown, merchants additionally verify that the customer is in physical possession of the card and is the authorized user by asking for additional information such as the security code printed on the back of the card, date of expiry, and billing address.

Each month, the credit card user is sent a statement indicating the purchases undertaken with the card, any outstanding fees, and the total amount owed. After receiving the statement, the cardholder may dispute any charges that he or she thinks are incorrect. Otherwise, the cardholder must pay a defined minimum proportion of the bill by a due date, or may choose to pay a higher amount up to the entire amount owed. The credit issuer charges interest on the amount owed if the balance is not paid in full (typically at a much higher rate than most other forms of debt). In addition, if the credit card user fails to make at least the minimum payment by the due date, the issuer may impose a "late fee" and/or other penalties on the user. To help mitigate this, some financial institutions can arrange for automatic payments to be deducted from the user's bank accounts, thus avoiding such penalties altogether as long as the cardholder has sufficient funds.

The benefits of credit card is for the issuer, the card holder and the marchent. The card issuers gets the interest from the card holder and also provide the service to them. And the marchents gets the advantages to sell the product on credit and the card holder gets the support to purchase the product at the time of there need. A credit card may be benefited for all if it is maintained properly.

- Article Written By: Md. Mahfuzur Rahman, BankInfoBd

References:
http://inventors.about.com/od/cstartinventions/a/credit_cards.htm
http://www.creditcards.com/credit-card-news/credit-cards-history-1264.php
http://en.wikipedia.org/wiki/Credit_card

Bangladesh Bank (BB) and Bangladesh Finance and Investment Co Ltd (BD Finance) signed an agreement on re-financing the small and medium enterprise (SME) sector.

Under the agreement, the central bank will finance Bd Finance from the ADB Fund for providing loans to SME projects.

Sukomal Singha Chowdhury, general manager of Bangladesh Bank and GM Salehuddin Ahmed, managing director and CEO of BD Finance signed on behalf of their respective oranizations, said a press release.

High officials of SME and special programmes department of BB and deputy managing director, company secretary and senior officials of BD Finance were also present at the signing ceremony.

Source: daily-sun, Bangladesh/ March 11, 2011

Citibank, N.A. has recently appointed Rashed Maqsood as its managing director and Citi Country Officer for Bangladesh.

Prior to the new role, he held the position of country business manager of the bank in December 2010. He was the head of global transaction services for Citi in Indonesia for three years before he took up the new role in Bangladesh, said a press release.

Maqsood started his 18-year banking career with Citi in 1995 as a relationship manager before going on to lead the newly established Corporate Banking Business franchise in Bangladesh.

He is a strong supporter of various CSR initiatives including financial education for the youth and Bangladeshi culture and music. He is also involved with the initiatives supported by the Citi Foundation – the philanthropic arm of Citi and also oversees the Corporate Affairs function. In Bangladesh, he successfully rolled out Citi’s flagship initiative – the Citi Microentrepreneurship Award for three consecutive years, the statement said.

He received an MBA majoring in Finance from the Institute of Business Administration (IBA) of Dhaka University and attended various international senior leadership programs across Asia Pacific and Europe.

Source: daily-sun, Bangladesh/ March 11, 2011

Pubali Bank Limited (PBL), the largest bank in private sector won the “Best Rated Bank 2010” award by the leading economic industry.

Helal Ahmed Chowd- hury , managing director of the bank has received the award from the chief guest Dr. Mohammed Farashud- din, former governor of Bangladesh Bank at a function of the national press club in the city recently.

Pubali Bank has been adjudged as a best rated bank in recognition to its capital adequacy, satisfactory income, percentage of non-performing loans and contribution to the corporate social responcibility (CSR).

A Q Siddiqui, chairman of Bangladesh Commerce Bank Limited (BCBL), Md. Shahjahan Khan, former sr. vice-president of Dhaka Chamber of Commerce and Industry (DCCI) were present as special guests. Enayet Karim, editor of the industry presided over the function.

Source: daily-sun, Bangladesh/ March 11, 2011

The World Bank is going to review its US$3.6 billion lending schemes in Bangladesh next week amid concern that at least half of the 28 projects it is financing has failed to attain desired pace of implementation.

Officials said four of the projects have been singled out as "risky" and "problematic" and at least 11 others have "very high un-disbursed balances", raising fears the schemes may not achieve the desired results.

Finance ministry officials said the "implementation status" of all these projects and their bottlenecks will be discussed on Sunday when they meet representatives of World Bank Dhaka office in the planning commission.

"It's a crucial meeting. All the schemes being implemented with the World Bank's fund will be discussed there. They have raised some issues. We hope we can satisfy their queries," said an Economic Relations Division official.

The Washington-based bank is the country's largest donor. Annually it lends Dhaka $1.2 dollar in soft loans, which play a key role in Bangladesh's infrastructural, social, human and agriculture development.

The official said the World Bank would also review an "action plan", set jointly by the lender and the government in January to speed up the implementation of 28 projects, for which the lender has committed at least $3.6 billion.

According to the Bank, Bangladesh government's project executing agencies have been able to spend only $195.7 million loan during the first half (July-December) of the current financial year 2010-2011.

"We have identified the problematic and risky projects from the 28 ongoing schemes. These projects face slow disbursement of the funds and some other bottlenecks," a World Bank official in Dhaka office told the FE.

He spoke on condition of anonymity because he is not authorized to talk to the press.

The lender has identified avian influenza preparedness, water management improvement, disability and children at risk, and the enterprise growth and bank modernisation projects as "risky and problematic".

Besides, it has identified 11 others of the ongoing operational schemes, which have less than 50 per cent fund disbursement despite they have completed average two years project cycle since the loan agreements.

They include $350 million Siddhirganj peaking power plant, $149 million Dhaka water supply and sanitation, $184 million emergency cyclone recovery, $62.2 million clean and sustainable environment, $81 million higher education quality enhancement and $307 million investment promotion financing projects.

The Bank has said these projects face belated procurement and financial mismanagement, delay in setting implementation arrangements and complex government procedures.

A senior ERD official said since the government agencies have failed to implement the schemes in time, the Washington-based lender has cut back on the disbursement of the entire fund committed for the projects.

"The government agencies and the World Bank representatives will attend the next week's meeting. Our officials will explain the barriers in project execution as well as fund disbursement," he told the FE.

"I hope it will be fruitful meet and help us overcome the hurdles. Otherwise, some of these multi-million dollars schemes may face a bleak future," he added.

Source: The Financial Express, Bangladesh / March 11, 2011