Published at: The Financial Express, February 20, 2019
Nagad, a new digital financial service of postal department, has got caught in a quandary regarding licensing from the central bank.
Sources said complexities arose as to whether the Bangladesh Post Office (BPO) needs to seek a licence ahead of the formal launch of the service.
To settle the issue, the finance ministry recently asked the Bangladesh Bank (BB) to scrutinise whether the postal department would need its licence to run ‘Nagad’.
In reply, the central bank said the BPO needed to get a licence for such services as Nagad will be operated by a private third party through banking channels.
But the BPO has strongly opposed the regulator’s viewpoint.
Preferring anonymity, a top postal official said, “There is no question to get BB’s licence in order to launch Nagad service.”
“If needed, we had better take permission from post, telecommunications and information technology ministry,” he said categorically.
The official said Nagad, a BPO product, would only be regulated under the ‘Bangladesh Postal Act (Amendment) 2010’.
Nagad would not come under the existing mobile financial services (MFS) regulations, he explained.
When contacted on Sunday, BPO director general Sushanta Kumar Mandal declined to comment on the BB’s opinion regarding permission to formally launch ‘Nagad’.
He, however, said a central, regulatory guideline would be framed for running the Nagad service soon.
Last January, Lila Rashid, general manager of BB’s Payment Systems Department, gave an opinion as sought by the financial institutions division under the finance ministry.
The central bank thinks it should monitor payment and remittance services of postal department through amending existing rules, she said in the letter. The banking regulator will ensure a secure payment system here as per Section 7A (e) of the Bangladesh Bank Order 1972.
The BPO also has the right to operate payment, savings, remittance and insurance services as per Bangladesh Postal (Amendment) Act 2010, Ms Rashid says.
The BB rules contradict with the postal law in operating the proposed service, another source has said.
Ms Rashid said the BB had not taken any steps due to inconsistencies in the existing laws of the central bank and the postal official department.
Initially, Nagad was designed to serve the clientele through post offices only.
Later, it was seen that Nagad was delivering services through third-party agent points and distribution channel management.
Agent supervision is also being done by a third party.
The central bank mentioned that the banking channel was being used to operate Nagad.
Last October, the BPO introduced ‘Nagad’ tentatively.
Under the scheme, a Nagad customer will be able to cash in or cash out Tk 50,000 in a single transaction and a maximum of Tk 250,000 through 10 transactions a day.
Meanwhile, the test run of Nagad service has raised concerns among rival service providers.
This comes at odds with other providers who, as per regulations, can cash in a maximum of Tk 15,000 via two transactions and cash out a maximum of Tk 10,000 a day.
Industry insiders fear Nagad service, with its increased transaction ceiling, may create an unhealthy competition in the market.
At the same time, they believe, Nagad will increase scope for huge money laundering and terror financing.
Solaiman Shukhon, Nagad head of corporate and regulatory affairs and public relations, said: “We’ll go for commercial operation as per the instruction of the ministry concerned and the BPO.”
Currently, there are 160 Nagad distributors across the country. To date, Tk 0.2 million has been given to each distributor on a experimental basis, he mentioned