Hopes High for Burma’s Burgeoning Credit Card Industry

By Kyaw Hsu Mon 27 January 2016

RANGOON — With credit card options proliferating in Burma, many of the country’s private banks are hoping to see more buzz within the industry in the months ahead.

Last year the Central Bank of Myanmar greenlighted the use of credit cards by private banks, a move that led to various types of credit cards being issued to clients. In May, the Central Bank allowed domestic banks to issue quasi-credit cards that function like debit cards.

Aung Kyaw Myo, general manager of Kanbawza (KBZ) Bank, said the bank’s so-called “secure credit cards” are already in distribution, but an upgrade to fully functioning credit cards is now in the works.

“We’re hoping to launch five new credit cards. We’re waiting to receive them from abroad, so I can’t give any details yet, but we’ll make an announcement later,” he said.

Aung Kyaw Moe said that credit card use is feasible even in the absence of a credit bureau, which Burma does not yet have.

Nan Saw Kham Phyu, deputy general manager of Ayeyarwady (AYA) Bank, said that AYA has begun using “unsecured” credit cards, meaning that the bank will distribute money to its clients even if they do not currently have the assets in their accounts.

“We will give a credit rating for each individual user based on their profile—income, age, occupation, recommendation of the employer and years of employment,” she said.

She added that while users do not have to pay interest for 50 days, after this time the interest rate will become 1.08 percent per month. The credit limit is 3.5 times users’ monthly income, with a maximum withdrawal limit of 5 million kyat (US$4,500) set by the Central Bank. Interested users must be at least 21 years old to be eligible for the card.

“We’ll also introduce cards to be used abroad this year. We’re planning to offer debit and credit card services that will function at home and abroad,” Nan Saw Kham Phyu said.

“New users will have to be recommended by at least two other people. Credit card ratings will also depend at least in part on the number of family members, so even if two people have the same income, their credit rating may be different,” she added.

Burma’s former military regime stopped the issuance of credit cards after an uptick in bad debts was spurred by the 1997 Asian Financial Crisis. Because the country’s banking system still lacks a credit bureau to evaluate loan applicants’ suitability for credit, bank managers and the Central Bank have elected to take a measured approach to financial reforms, including making credit available to consumers and businesses.