Bangladesh Bank has set the highest limit on the interest rate on credit card usage at 20 per cent

The central bank set the highest limit on interest rate on Thursday as many banks were charging their customers above 27 per cent in violation of BB rules.

A circular issued by the Bangladesh Bank, says that the interest rate ceiling on credit cards would be effective from October 1 this year.

The BB circular said that the banks were allowed to serve customers up to 50 per cent of the credit card limit as advances.

However, many of the banks were issuing loans to their customers against credit cards at a flat rate of interest.

The BB mentioned issuance of such loans at high interest rate as 'irrational and detrimental' to customers' interest.

The Bangladesh Bank said that the interest could be imposed on unpaid bills from the immediate next day of the last date for the payment of credit card bills.

Banks were asked not to impose interest from the date of transaction, it added.

Banks were barred from providing any other cash withdrawal facility to their customers as loans against credit cards except 50 per cent cash withdrawal against their limit.

The BB said banks can charge a late fee for only one time against any late payment.