Nagad to fall in line finally

Nagad, a mobile financial service provider of the Bangladesh Post Office and a private entity, has received an interim licence from the Bangladesh Bank, as part of its push towards digital money amid the pandemic.

The central bank would carry out inspections on the operator before awarding the final licence, a senior official of the BB's payment systems department told The Daily Star on Sunday.

The development comes after the fledgling MFS provider applied to the central bank in March for a full-fledged licence, prompted by a BB move that left it hamstrung.

On March 5, the BB asked banks to stop the operation of trust-cum-settlement accounts maintained by organisations that are giving MFS and digital wallet services without its approval.

Subsequently, several banks suspended such accounts of Nagad, making it difficult for the company to run its operations.

Before the temporary licencing was given, Nagad was the only MFS operator that was not running as per BB rules.

It even didn't follow the "one national identification card per account" rule, allowing it to attract a huge number of customers, industry people say.

As part of its bid to get the full-fledged licence from the BB, Nagad will now have to cut the additional transaction limit it enjoys compared with other MFS operators.

Currently, a user of Nagad can transact Tk 2.5 lakh per day under the Postal Act, whereas it is only Tk 30,000 for the other MFS providers.

Tanvir Ahmed Mishuk, managing director of Nagad, welcomed the BB move, saying the operator's existing offers would continue as the central bank hasn't imposed any restriction on them.

"When the Bangladesh Bank finalises the guideline and if any restriction is imposed, we will comply with that," he told The Daily Star yesterday.

The interim licence did not mention any conditions, said SS Bhadra, director-general of the postal department.

"If we are asked to cut the transaction ceiling, we will do that," he added.

However, a senior BB official contradicted both Mishuk and Bhadra, saying Nagad has to follow the rules and regulations applicable for other MFS providers.

"If the operator doesn't follow the rules, it would face the music," he added.

Earlier, a good number of MFS providers requested the central bank to figure out the problem, as separate transaction limits were unfair for those who operate as per BB rules.

The BB also raised questions at various platforms, including the finance ministry about Nagad's service delivery process, while the Anti-Corruption Commission pointed out that the company's accounts are used for illegal transactions because of the higher limit and lax compliance.

The issues were discussed at several meetings of the central bank, the ACC and the finance ministry.

However, Mishuk said the operator is closely working with the Bangladesh Financial Intelligence Unit (BFIU) of the BB and the BFIU hasn't received any complaints against Nagad.

The BB will have to take approval from its board before granting the full-fledged licence to Nagad as only bank-led model for MFS is now followed in Bangladesh.

Nagad is a joint venture between the Bangladesh Post Office and Third Wave Technologies. The postal department owns a 51 per cent stake.

It rolled out commercial service on March 26 last year although the operator has been in operation since September 2018.

Riding on the huge transaction limit benefit, Nagad made a good start and has so far added 1.84 crore active accounts.

A few hundred crores of taka change hands every day through the digital platform but it is not reflected in the central bank's statistics.