The central bank of China has relaxed credit-card lending rates in a bid to boost market competition.
The new rule, which will be effective from next year, allows banks across the country to offer up to 30% discount on the credit-card lending rate, the People’s Bank of China (PBOC) said in a statement. Currently, the lending rate is 0.05%per day.
At the same time, the central bank has increased the daily cash withdrawal limit for card holders from the country’s ATMs to CNY10,000 ($1545.57) from the existing limit of CNY2,000 ($309.10).
In order to give banks autonomy to set their own terms, PBOC has also decided to eliminate unified rules on banks’ interest-free period and minimum monthly repayments.
At present, the interest free period can run up to 60 days, while minimum monthly payment is at least 10% of the monthly bills.
The new rule also mandates banks to decide whether and how much they will charge card holders for delay in payments, PBOC stated.