Economic Reporter :
With mounting business trend in 2020 driven by rising pandemic demand, the country’s Mobile Financial Service (MFS) industry is set to jump-start to a new height in 2021, thanks to the government’s recent decision to place Nagad under regulatory supervision of Bangladesh Bank in order to ensure discipline and restore a conducive environment.
The government will form a joint-venture company to carry out operations of Nagad, the MFS player of Bangladesh Post Office (BPO) operated by a private fintech firm The Third Wave Technology (TWT) in order to comply with the central bank’s regulations.
Posts and Telecommunications Minister Mustafa Jabbar disclosed this recently at a press conference following widespread criticisms for rule violation incidents of Nagad and the relationship between the government’s BPO and its operating agent TWT.
But both regulators and market players have expressed their happiness with the hope that this decision will help the MFS industry to move ahead in compliant in 2021.
The minister, however, didn’t give any further information regarding the reasons behind the government’s decision to form a joint venture company between BPO and TWT and when would the company be formed. But the industry experts see the Nagad’s controversial entry into MFS market and non-compliant activities as the main reasons behind it.
“This is a long- ailing demand from both regulators and market players that Nagad should play in the market under a level playing field environment. For its controversial entry and rule breaking incidents, Nagad was a big concern for all in the MFS market, ” one highly placed official of Bangladesh bank said.
“Nagad entered into the MFS landscape in 2018 under a different law and its exorbitant transaction limits destabilized the market environment breaking down the level playing field”, the central bank official explained on condition of anonymity.
“The government will form joint venture company to place Nagad under BB, which will ensure discipline in MFS industry”, the BB official said.
Nagad recently has come under the government’s scrutiny following the report that the platform is completely controlled by The Third Wave Technology (TWT), a private fintech firm, completely outside the purview of the government.
The concern is that BPO officials do not know how much money exactly is transacted through the nagad platform, how much is the earning it makes, how is the e-money created against mandatory cash deposit of corresponding amount in schedule commercial bank, how is it reconciled on a daily basis and how much is the tax/VSAT paid to NBR by TWT? Hosts of question remain un-answered as Nagad services and its board controlled entirely by TWT.
“It means, the TWT has so far been riding on the back of government’s owned BPO”, said a senior banker. “The government should immediately initiate an audit to discern facts and figures prior to forming the proposed joint venture company to ensure accountability and put things in order”, he stated.
The MFS industry experienced in last seven months transaction shot up to Tk 49,121.25 crore in September with record transaction of Tk 62,999.28 crore in July 2020, as people found this tool as a safe and convenient payment tool to meet their daily needs in the difficult days of pandemic.
The government enforced lockdown across the country in late March 2020 to keep the citizens safe from virus contamination. The MFS transactions started to pick up since last July because an increasing number of people, businesses and government agencies used such digital services for making their payments to avoid movement as well as contact.
In April, global markets saw a 200% jump in new mobile banking registrations, while mobile banking traffic rose 85%, according to Fidelity National Information Services (FIS). The sharp uptick is due to the coronavirus lockdown, which resulted in many bank branches being closed.
“MFS industry is a growth story of Digital Bangladesh driven by impressive performance of bKash and other MFS operators under prudent regulations. The industry will move ahead with faster speed in the days ahead if the government can ensure conducive environment”, said a CEO of a MFS operator.
Under such circumstance, the MFS industry needs discipline and all possible compliant behavior to continue its journey towards a success story that world would reckon with. The greater interest of the country must prevail over petty interest of a few individuals or a group.
With mounting business trend in 2020 driven by rising pandemic demand, the country’s Mobile Financial Service (MFS) industry is set to jump-start to a new height in 2021, thanks to the government’s recent decision to place Nagad under regulatory supervision of Bangladesh Bank in order to ensure discipline and restore a conducive environment.
The government will form a joint-venture company to carry out operations of Nagad, the MFS player of Bangladesh Post Office (BPO) operated by a private fintech firm The Third Wave Technology (TWT) in order to comply with the central bank’s regulations.
Posts and Telecommunications Minister Mustafa Jabbar disclosed this recently at a press conference following widespread criticisms for rule violation incidents of Nagad and the relationship between the government’s BPO and its operating agent TWT.
But both regulators and market players have expressed their happiness with the hope that this decision will help the MFS industry to move ahead in compliant in 2021.
The minister, however, didn’t give any further information regarding the reasons behind the government’s decision to form a joint venture company between BPO and TWT and when would the company be formed. But the industry experts see the Nagad’s controversial entry into MFS market and non-compliant activities as the main reasons behind it.
“This is a long- ailing demand from both regulators and market players that Nagad should play in the market under a level playing field environment. For its controversial entry and rule breaking incidents, Nagad was a big concern for all in the MFS market, ” one highly placed official of Bangladesh bank said.
“Nagad entered into the MFS landscape in 2018 under a different law and its exorbitant transaction limits destabilized the market environment breaking down the level playing field”, the central bank official explained on condition of anonymity.
“The government will form joint venture company to place Nagad under BB, which will ensure discipline in MFS industry”, the BB official said.
Nagad recently has come under the government’s scrutiny following the report that the platform is completely controlled by The Third Wave Technology (TWT), a private fintech firm, completely outside the purview of the government.
The concern is that BPO officials do not know how much money exactly is transacted through the nagad platform, how much is the earning it makes, how is the e-money created against mandatory cash deposit of corresponding amount in schedule commercial bank, how is it reconciled on a daily basis and how much is the tax/VSAT paid to NBR by TWT? Hosts of question remain un-answered as Nagad services and its board controlled entirely by TWT.
“It means, the TWT has so far been riding on the back of government’s owned BPO”, said a senior banker. “The government should immediately initiate an audit to discern facts and figures prior to forming the proposed joint venture company to ensure accountability and put things in order”, he stated.
The MFS industry experienced in last seven months transaction shot up to Tk 49,121.25 crore in September with record transaction of Tk 62,999.28 crore in July 2020, as people found this tool as a safe and convenient payment tool to meet their daily needs in the difficult days of pandemic.
The government enforced lockdown across the country in late March 2020 to keep the citizens safe from virus contamination. The MFS transactions started to pick up since last July because an increasing number of people, businesses and government agencies used such digital services for making their payments to avoid movement as well as contact.
In April, global markets saw a 200% jump in new mobile banking registrations, while mobile banking traffic rose 85%, according to Fidelity National Information Services (FIS). The sharp uptick is due to the coronavirus lockdown, which resulted in many bank branches being closed.
“MFS industry is a growth story of Digital Bangladesh driven by impressive performance of bKash and other MFS operators under prudent regulations. The industry will move ahead with faster speed in the days ahead if the government can ensure conducive environment”, said a CEO of a MFS operator.
Under such circumstance, the MFS industry needs discipline and all possible compliant behavior to continue its journey towards a success story that world would reckon with. The greater interest of the country must prevail over petty interest of a few individuals or a group.
