Economic Reporter :
The Post and Telecommunications Ministry is going to place its mobile financial service (MFS)- Nagad next month under central bank’s regulatory framework in order to ensure discipline in operations and restore conducive environment in the country’s MFS industry.
As part of the move, the ministry has asked Nagad authority to form a company with a leading state run bank to operate Nagad under the Bangladesh Bank’s regulations and stop mobilising deposits from customers until the central bank approval, a top ministry official said.
Nagad, the digital platform of Bangladesh Post office is being operated by a third party fintech- Third Wave Technology (TWT) has been operating MFS business since its inception in 2019 without license of Bangladesh Bank. This has shaken the industry’s regulatory environment by some rule breaking incidents, which concerned both regulators and market players.
Sources in the Postal ministry said the proposed company to run Nagad operations under central bank’s regulations will be formed comprising of Sonali Bank, Bangladesh Post Office (BPO) and TWT. The process is underway and Nagad operation is now under stringent scrutiny of the government.
The share distribution would be sonali Bank 34%, BPO 33% and TWT 33%. But Sonali Bank, the state run leading commercial bank of the country is yet to give its consent as the existing share pattern is not confront the existing bank led regulations for MFS operations.
“We are firm to restore discipline in Nagad operations and ensure healthy environment in the country’s MFS industry which is a vital tool to promote financial inclusion and spur economic growth. No anomalies and rule breaking incidents of Nagad would be allowed any more” Md Afzal hossain, Secretary of Post and Telecommunications Ministry said.
Nagad has been operating by TWT under a revenue sharing agreement with Bangladesh Post Office without director control of the Postal Department in its operations which allowed Nagad to violate regulations, create market distortions and concern over risks of money laundering.
Immediately after its maiden journey from different regulatory environment, Nagad destablised MFS industry landscape and hit other 18 MFS operators regulated by Bangladesh Bank offering nine time higher transaction limits which sparked red alert for risks of money laundering and malign the growth of MFS industry.
Bangladesh Bank, Bangladesh Financial Intelligence Unit, Bangladesh Investment Development Authority (BIDA) and finally the Ministry of Finance requested the Ministry of Post and Telecommunications to place Nagad under the same regulatory supervision of Bangladesh Bank to keep growth pace.
The latest rule breaking incident made by Nagad was deposit mobilisation from innocent consumers offering lucrative interest offer and keep all deposited money in different bank accounts of TWT, which has agitated both the postal Department and Bangladesh Bank.
Bangladesh Bank has asked all banks not to allow such deposits and not to create e-money for any unregulated MFS operator in order to keep financial market stable. Nagad, however, has stopped deposit mobilisation immediately and its Managing Director Tanvir A Mishuk on December 24 in a letter assured the central bank not to mobilise deposit further.
The Post and Telecommunications Ministry is going to place its mobile financial service (MFS)- Nagad next month under central bank’s regulatory framework in order to ensure discipline in operations and restore conducive environment in the country’s MFS industry.
As part of the move, the ministry has asked Nagad authority to form a company with a leading state run bank to operate Nagad under the Bangladesh Bank’s regulations and stop mobilising deposits from customers until the central bank approval, a top ministry official said.
Nagad, the digital platform of Bangladesh Post office is being operated by a third party fintech- Third Wave Technology (TWT) has been operating MFS business since its inception in 2019 without license of Bangladesh Bank. This has shaken the industry’s regulatory environment by some rule breaking incidents, which concerned both regulators and market players.
Sources in the Postal ministry said the proposed company to run Nagad operations under central bank’s regulations will be formed comprising of Sonali Bank, Bangladesh Post Office (BPO) and TWT. The process is underway and Nagad operation is now under stringent scrutiny of the government.
The share distribution would be sonali Bank 34%, BPO 33% and TWT 33%. But Sonali Bank, the state run leading commercial bank of the country is yet to give its consent as the existing share pattern is not confront the existing bank led regulations for MFS operations.
“We are firm to restore discipline in Nagad operations and ensure healthy environment in the country’s MFS industry which is a vital tool to promote financial inclusion and spur economic growth. No anomalies and rule breaking incidents of Nagad would be allowed any more” Md Afzal hossain, Secretary of Post and Telecommunications Ministry said.
Nagad has been operating by TWT under a revenue sharing agreement with Bangladesh Post Office without director control of the Postal Department in its operations which allowed Nagad to violate regulations, create market distortions and concern over risks of money laundering.
Immediately after its maiden journey from different regulatory environment, Nagad destablised MFS industry landscape and hit other 18 MFS operators regulated by Bangladesh Bank offering nine time higher transaction limits which sparked red alert for risks of money laundering and malign the growth of MFS industry.
Bangladesh Bank, Bangladesh Financial Intelligence Unit, Bangladesh Investment Development Authority (BIDA) and finally the Ministry of Finance requested the Ministry of Post and Telecommunications to place Nagad under the same regulatory supervision of Bangladesh Bank to keep growth pace.
The latest rule breaking incident made by Nagad was deposit mobilisation from innocent consumers offering lucrative interest offer and keep all deposited money in different bank accounts of TWT, which has agitated both the postal Department and Bangladesh Bank.
Bangladesh Bank has asked all banks not to allow such deposits and not to create e-money for any unregulated MFS operator in order to keep financial market stable. Nagad, however, has stopped deposit mobilisation immediately and its Managing Director Tanvir A Mishuk on December 24 in a letter assured the central bank not to mobilise deposit further.
