Telcos can’t hold shares in mobile banking cos

Say new BB draft guidelines

AKM Zamir Uddin | Published: 22:19, May 15,2017

 
 

Bangladesh Bank will not allow mobile network operators to hold any shares in the companies which run mobile financial service, according to the BB’s latest draft guidelines on the MFS.
The draft guidelines said that the MNOs would just provide networking services to settle clients’ transaction through the MFS.
The MNOs have been demanding for long to allow their investment in the MFS operation, but the BB high-ups are openly opposing their (MNOs) demand at different seminars and events as the central bank has decided to follow a bank-led model in this regard.
In 2015, Trust Bank decided to form a subsidiary with Malaysia’s Axiata Group to provide the MFS, but the BB did not entertain their initiative.
Axiata Group is now holding the majority of shares of Robi Axiata Ltd, one of the MNOs operating in Bangladesh.
If approved, Trust Bank would have held the subsidiary company’s 51 per cent shares while Axiata would have owned the rest.
The central bank had earlier prepared another draft of the MFS guidelines where it said a single MNO would be allowed to hold 15 per cent of shares of a subsidiary company engaged in MFS operation and jointly they would be allowed to hold maximum 30 per cent of its shares.
The BB, however, backtracked from its earlier decision while preparing the new draft guidelines.
Banks will have to form subsidiary companies to operate their mobile banking services and the companies will play as payment service providers (PSPs).
A bank will have to hold minimum 51 per cent of the PSP’s shares and the PSP will play role as a separate company.
Two to three banks will be allowed to form jointly a subsidiary company to operate MFS.
Non-bank financial institutions, micro-finance institutions and insurance companies will be allowed to hold shares in a PSP, but the banks will have to take decision cautiously in this regard as the central bank does not regulate the institutions.
Banks and other institutions, which will form subsidiary companies for operating MFS, will have to keep paid-up capital amounting Tk 100 crore with the central bank.
The subsidiary companies will have to give insurance coverage to the clients who maintain accounts with the MFS.
Currently, 18 banks are operating MFS, but only BRAC Bank runs the business through a subsidiary company.
The banks, which earlier took no-objection certificate from the central bank to operate MFS, will have to form subsidiary companies to run the business within one year after issuing the finalised guidelines.
The subsidiary companies will have to launch their operation within 18 months after taking the licence from the central bank, the draft guidelines said.
A BB official told New Age on Monday that the central bank was now seeking opinion on the guidelines from its different departments.
He said that the central bank would finalise the guidelines within the shortest possible time.

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