IN A concerted effort to curb the ever-spiralling debt crisis in domestic households, the relevant authority has sought the cooperation of all banks to rationalise the usage of credit cards.

Among the guidelines set out by the Ministry of Finance to the local banks is a maximum limit placed on credit card to individuals based on their monthly salary.

Debts have created misery for many Bruneians and many have ended up with court notices. Other commitments such as housing and car repayment make credit card debt worse as many end up defaulting not able to repay even the basic minimum requirement.

The ministry in its latest notice sent to all licensed banks has stated that with effect from January 1, 2010, all licensed banks providing credit card services in the Sultanate shall conform to several criteria. The notice is pursuant to Section 66 of the Banking Order, 2006.

The notice, a copy of which was obtained by the Bulletin, stated that all credit card holders shall be at least 21 years old and that the minimum gross salary for an individual cardholder shall be at least $500 per month.
In addition, the maximum credit card limit for each individual shall be based on the gross monthly salary whereby those who earn a salary of between $500 and $1,000, the credit limit is one month salary while those who draw a salary of between $1,000 and $10,000, the credit limit is two-month salary. For those earning more than $10,000, the limit is set based on the bank’s recommendation.

The notice also stated that credit cards shall only be offered to customers who have a bank account and whose monthly salary is actively credited into the account or customers who have a fixed deposit account with the equivalent value of the maximum credit limit required.

The Ministry of Finance notice also stressed that from March 2010, the minimum monthly payment shall not be less than eight per cent of the outstanding balance on the monthly statement and that banks shall not permit their credit card holders to use their credit cards to pay their monthly loan obligations to the issuing bank or any of its subsidiaries.

The notice also stated that a grace period of a maximum of six months would be granted to all banks to facilitate uniform compliance with this directive after which period customers who do not qualify under the above criteria would have their credit cards withdrawn or invalidated.

Such customers would thereafter be given a period of 36 months to settle their credit card obligations to the respective banks.

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