Nagad gets Bangladesh Bank’s NOC despite having higher transaction limit

Staff Correspondent | Published: 21:30, Apr 19,2020


The Bangladesh Bank has issued a no-objection-certificate for six months to Nagad a year after the official launch of the mobile financial service operator, despite having transaction limits beyond the BB-set threshold.

Nagad, a joint-venture of Bangladesh Post Office and Third Wave Technologies Limited, ran its operations without a BB licence while the other mobile financial service operators that have BB licences are bank-led operators.

A BB official said that Nagad would have to comply with the central bank’s rules and regulations to get a final approval in six months while a Nagad official said that no more approval would be needed from the central bank until the BB prepared guidelines on allowing BPO-led MFS.

Among others, the MFS operator will have to follow the BB’s rules on cash-in, cash-out and other transactions limits, which are much lower than the transaction limits Nagad was offering to its customers, said the BB official on Sunday.

Although the operator started its services in May 16, 2019, high transaction limits and a bit lower transaction fee helped the operator to attain a Tk 100 crore transaction landmark in just one year.

For instance, a Nagad customer can cash in (a form of deposit in MFS account) highest Tk 2.5 lakh in a day and Tk 5 lakh in a month.

On the contrary, the BB’s regulations allow a MFS accountholders to cash in maximum Tk 30,000 a day and Tk 2 lakh in a month.

Besides, Nagad customers also enjoy higher cash-out and person-to-person transaction limits, leaving the BB-licensed MFS operators into a bit discomfort.

Within the interim NOC period, the central bank will inspect the company to seen whether the MFS provider has complied with the rules and regulations or not, the BB official said.

Unless implemented as per the instructions, the BB would not accord its final approval, said the BB official, adding, ‘If we find that the MFS provider has complied with all the rules and regulations, we would issue a final approval.’

Mentioning that the BB’s approval was final, Nagad managing director Tanvir A Mishuk, however, told New Age that there would be no requirement to take further approval from the central bank.

The BB has guidelines which are only designed for bank-led MFS, said Tanvir, adding that the model would not be effective for Nagad as the BPO holds its majority shares.

‘Until the central bank prepares guidelines incorporating BPO’s shareholding in Nagad, we would continue with our existing operation model,’ he said.

Tanvir said, ‘We have a set of transaction limits approved by the finance ministry and there is a different set of limits for bank-led MFS operators. Which one should I follow must be determined by the authorities first before we change the model.’

Since its launch, the operator has refrained from taking approval from the central bank and was running its operation under The Post Office Act.

However, a central bank instruction issued on March 5 this year asked all the scheduled banks not to provide any banking services or transactions facility to unlicensed payment service providers (PSP) and payment system operators (PSO).

The BB also said that the customers’ confidence in legal PSPs and PSOs would be hurt if any illegal entity closed down operations after cheating people.

The country’s overall economy may face instability due to electronic currency creation by the illegal entities and use of those for trade, it said.

Given the situation, the BB asked the banks not to facilitate custodian accounts, trust-cum-settlement accounts or any other accounts or transaction facilities and banking services to the entities which were running mobile or e-wallets as payment system operators or any other payment service provider without obtaining licence from the central bank.

After the BB’s instruction, the banks which were providing services to Nagad had stopped providing services that prompted Nagad to file an application with the BB for MFS licence, the BB official said.

Based on the application, the BB issued the six-month NOC to Nagad.

Want stories like this in your inbox?

Sign up to exclusive daily email