The Department of Posts has submitted an application to the central bank for further validity extension of the BB’s temporary approval or no objection certificate to the country’s second largest mobile financial service operator Nagad.
Nagad, a joint-venture of the Bangladesh Post Office and Third Wave Technologies Limited (renamed as Nagad recently), was granted temporary approval to run its operations by the BB in 2020.
Since the launching of the service on May 16, 2019, the operator was running its operations under the Post Office Act 1898.
The ministry took the initiative to bring Nagad under the BB’s regulatory framework in 2020 and was awarded a temporary licence by the central bank for an interim period, which comes to an end on March 15, 2021.
The Department of Posts, however, has now submitted a plea for extension of the NOC validity by six more months to comply with the BB’s regulatory requirements.
Asked about the submission of the application, Nagad chief executive officer Rahel Ahmed told New Age on Thursday, ‘It’s part of the regular process of running a digital financial service with temporary permission before getting the final approval.’
‘There is a massive integration process involved in running a successful digital financial service with more than 3.2 crore customers and a daily transaction value of about Tk 350 crore, and we are very close to completing the process,’ he said.
‘As a compliant mobile financial service entity, we are doing it holistically and it takes more time to complete the procedure – that’s why the Postal Division has applied to the banking regulator to extend its permission,’ Rahel said.
As per the BB’s conditions outlined in the NOC, the MFS operator was supposed to file an application with the BB upon fulfilment of the regulatory conditions within the validity of the NOC.
Formation of a separate entity by ensuring the stake of the BPO in the MFS operator was a must for Nagad, among other things, to get the final approval.
Within the interim NOC period, the central bank was supposed to inspect Nagad to assess whether the MFS provider has complied with the rules and regulations.
In order to comply with the BB’s guidelines, the MFS operator has already lowered the transaction limit that had surpassed the BB’s allowable limit.
Earlier, a Nagad customer was allowed to cash in (a form of deposit in an MFS account) the highest Tk 2.5 lakh in a day and Tk 5 lakh in a month.
Now, the operator has lowered the daily cash in limit to Tk 30,000 and the monthly cash in limit to Tk 2 lakh.
Since the launch of its service, Nagad has managed to secure public attraction mainly due to a slightly lower transaction charge and its e-KYC based customer acquisition process.
Nagad allows its customers to open accounts by dialling a USSD code from their mobile handsets, which has given a big boost to the MFS operator’s client base.
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