Nagad digital bank faces nemesis

Much-hyped Nagad Digital Bank is on the brink following paradigm shift as the regulator is considering cancelling its licence allegedly for intervention of two influential persons of the immediate-past government.

It became Bangladesh's first digital bank in the process of transformation from a financial institution launched under the state-run postal department, in a controversial process that now comes under scrutiny, sources said.

In early June this year, Nagad was licensed as the country's first full-fledged digital bank. Bangladesh Bank director Mohammad Shahriar Siddiqui handed over the copy of the digital-banking licence to Nagad-founder CEO Tanvir A. Mishuk at the office of the central bank in Dhaka.

People familiar with the reckoning at the Bangladesh Bank told the FE that they had made their recommendations regarding cancellation of the licence. But it needs to be approved by the governor of Bangladesh Bank.

The BB governor has, meanwhile, has resigned amid commotion kicked up in the central bank by discontents in the wake of the fall of the Sheikh Hasina government in a student-people-power uprising.

The central is expected to make a final decision within the next few weeks.

"We expect the next governor will announce the cancellation," said a senior central banker, whishing anonymity.

He said they found intervention of two people from the government side in the licensing process through former governor Abdur Rouf Talukder. "One is a minister and another is immensely influential but not minister."

Nagad, which began as a mobile financial service under the Bangladesh Postal Department, also got non-bank financial institution licence few months before the beginning of the digital bank-licensing process.

Later, its authorities refused to take the licence as they would apply for the digital bank.

According to sources within the Bangladesh Bank, Nagad got under the scanner soon after the exit of the past regime.

Another senior official, also speaking on condition of anonymity, said: "We have evaluated and found intervention from two key government people."

The BB received a total of 52 applications from banks and various other entities interested in setting up digital banks in the country. The regulator issued in June last circular asking interested firms to apply for licence which opened the process of receiving applications between June 21, 2023 and August 17.

It introduced a Licensing and Regulatory Framework for Digital Banks in line with "international best practices".

The framework was the first step towards introducing full-fledged digital banks which are expected to provide all the banking services by digital means without customers needing to visit bank branches physically.

In response to BB's licensing and regulatory framework for digital banks, applications were received from a diverse range of interested players, such as commercial banks, insurers, mobile financial-service providers, IT firms, and startups.

The BB primarily gave the go-ahead to two digital banks: Nagad Digital Bank Plc and Kori Digital Bank Plc.

Mr. Tanvir A. Mishuk, the founder & CEO of Nagad, could not be contacted after repeated attempts over the phone for his comments on the process of disbanding the digital bank.

[email protected]