MEDIA reports said a security analyst firm’s finding showed that the central bank’s revised guideline on Mobile Financial Services (MFS) may not be industry friendly and will only increase transfer cost instead of reducing it. According to Brac EPL’s findings, the new guideline may affect business methods, ownership structures and competitiveness in the ever expanding mobile banking and financial services and it is not the right time to bring unnecessary regulations when the industry is yet to make a strong footing. Bangladesh Bank has taken the move for the new guidelines and soliciting public opinion now before adopting it practice.
bKash Ltd, a joint venture between Brac Bank and Money In Motion in the US, is the second largest mobile money transfer system in the world in terms of transactions and exclusively dominating mobile money transfer in Bangladesh. Its daily transfer turnover stands at around Tk 420 crore on an average. The new BB guideline would require all MFS operations to be run under a separate legal entity or setting up independent MFS companies with a minimum paid-up capital of Tk 100 crore for each. bKash was set up as a separate company by Brac Bank in Bangladesh with a paid-up capital of Tk 3.8 crore. Its ownership may face restructuring and the paid up capital to be enhanced. The industry structure would also require at least four banks to partner as sponsors of a MFS company in which they can own at least 51 percent of shares with no single bank owning more than 15 percent equity. Not only bKash, most other banks using more and more mobile banking services would require to make compromise.
Non-financial investors including mobile network operators can also own MFS company shares — up to 15 percent individually and 30 percent collectively. While the merits of the draft policy make a good case, risks associated with it do not. The case for mobile banking has not been taken seriously enough as the draft fails to account for relevant business practices that mobile bankers follow globally. In an economy, where there is a crucial need for mobile financial services, protection to money is needed but stringent guidelines will be of little help.
In our opinion, Bangladesh Bank should rather go for regulating the sector by limiting the amount of fees to be paid per transaction, which will help the poor by lowering per transfer costs. Setting regulations which increase the startup capital is unlikely to help decrease costs. On the contrary, common people who use the facilities most; will be hurt as the money transfer costs will most likely go up. Such regulations may not serve the users and the industry at the end.
