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The Bangladesh Bank has initiated a move to enforce tighter regulations on payment service, mobile financial service, e-wallet, payment system operators and any other non-bank entities authorised by the BB to provide payment services.
To this end, the central bank has drafted a set of guidelines and published the guidelines for stakeholders’ opinions on its web site.
Besides the payment service operators, the regulations would also be applicable to the banks which would maintain trust cum settlement accounts (TCSA) of the payment service providers and mobile financial service and payment system operators, among others.
Operating TCSA with banks is a must for the payment service operators for safekeeping of customers’ money.
The rapid growth in transactions through the payment systems in recent years has prompted the central bank to come up with the guidelines to secure the public money.
The central bank has taken a number of initiatives to make cashless society by using the payment service providers that has raised the importance of imposition of tighter regulations on them.
Of the payment service operators, transactions through the MFS operators stood at Tk 5,61,622 crore in the year 2020.
The guidelines said that the central bank would preserve the right of slapping financial penalty, withholding, suspension and cancellation of approval or no-objection certificate if it seems to the central bank that the service provider’s activities is detrimental to the public interest.
The guidelines titled ‘Guidelines for Trust Fund management in payment and settlement services’ said that the trust fund would comprise of any such money that creates a liability of the service providing entity to its customers and, or participants in the process of mutual business arrangement.
The guidelines are aimed at protecting the interest of actual owners of the fund, who have a lawful claim on such fund at any point in time.
The money received by MFS, PSP, PSO, or any other non-bank entity from its customers and, or participants for issuing e-money or payment instrument and, or settlement of transactions or sales proceeds or any other fund directed by the BB would be held in the trust fund, the guidelines said.
The MFS, PSP, PSO, or the non-bank entity that hold the trust fund, or any other person or entity authorised by the BB, would be the trustee.
On behalf of the beneficiaries, the central banks would be the overseer of the trust fund.
The guidelines would also allow the BB to seek documents from banks or trustee and may conduct offsite or onsite inspection related to the trust fund.
External audit of the trust fund is a must at least once a year and the submission of the same to the central bank has also been made mandatory.
The balance in the trust cum settlement account that would be operated by a payment service provider with banks must be higher or equivalent to the entities’ liability to its customers.
However, the guidelines have made it mandatory for the MFS operators and other payment service providers to invest a certain portion of the balance held in the trust cum settlement account in the government securities or fixed deposit receipts.
The MFS operators or other payment service providers have been allowed to take the interest or return to be generated against the investments as operating fees after payment of operating expenses of the trust fund, and customer awareness and loyalty programmes.
The central bank has drafted the guidelines as per the clause 7A (e) of the Bangladesh Bank Order 1972, clause 49(1) (Uma) of the Bank Company Act 1991 and clause 13(2) of Bangladesh Payment and Settlement Systems Regulations (BPSSR) 2014.
