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The Bangladesh Bank has once again renewed the interim licence of Nagad for another six months as the Bangladesh Post Office (BPO) is yet to form a subsidiary to run the mobile financial service.
This is the fifth extension after the state-run agency secured provisional approval from the central bank in March 2020.
Nagad has been operating without a full-fledged licence since its inception in March 2019. It has more than six crore customers and facilitates transactions of around Tk 750 crore daily.
The latest extension came on March 31 after the Directorate of Posts had applied to have the tenure extended for another term, said a BB official.
Md Siraz Uddin, director-general of the Directorate of Posts, is hopeful that all procedures might be completed within the new deadline in order to set up the subsidiary.
“We have sent the relevant documents to the Ministry of Posts, Telecommunication & Information Technology. The documents might have been sent to the law ministry for vetting in order to amend laws,” he said.
Laws would have to be amended because existing rules don’t allow the BPO to set up such a company. The government has moved to amend the Post Office Act, 1898 and the Post Office (Amendment) Act 2010.
As per the BB, the BPO is supposed to establish the subsidiary to run the MFS in a model similar to a public-private partnership.
The agency is expected to hold a 51 per cent stake in the new entity while Nagad Ltd, a private company, will own the rest.
Nagad is an MFS brand of the BPO. It has been operated by Third Wave Technologies Ltd, which renamed itself Nagad Ltd in February last year.
The private firm provides service to the BPO under a revenue-sharing model. The government agency gets 51 per cent of the revenue and the private firm receives the remainder.
The MFS started its operation without taking any permission from the central bank.
In March 2020, the BB asked banks not to provide any service to unauthorised payment or MFS providers and operators in the interest of depositors, forcing the BPO to take the interim approval after all banks suspended transactions with Nagad.
While availing of the permission for the first time, the postal department had promised to complete the official procedures to get the full-fledged licence. But it has not been able to do so in the last two years.
Posts and Telecom Minister Mustafa Jabbar said, “The ministry has taken initiatives to complete procedures within the new deadline in order to meet the central bank requirements.”
In Bangladesh, the authorities have followed a bank-led MFS model and all MFS providers are running businesses after securing approval from the central bank. But Nagad has been an exception, said the BB official.
Any other entity has hardly enjoyed such a favour from the central bank, he said, adding that everything has been done to give a legal cover to the operator.
In February, the central bank amended the MFS guidelines, paving the way for the non-bank financial institutions and government entities to run MFS alongside banks. This will allow the BPO to obtain the licence.
The mobile phone-based service began its journey in Bangladesh in March 2011. Currently, 13 MFS operators led by banks are operational.
The number of registered MFS accounts stood at 11.4 crore at the end of January, while active accounts numbered 4.4 crore.
Transactions rose 22 per cent year-on-year to Tk 73,367 crore in the month, BB data showed.
(TDS)
