Bangladesh Bank (BB) on Thursday suspended the digital banking licence it earlier awarded to Nagad Limited until the company passes a fresh review of the licencing procedure.
The development comes a day after the central bank appointed an administrator and his associates to maintain the company's existing regular activities - mobile financial services (MFS).
"Now, Nagad's digital banking licence has been stalled. We'll review it thoroughly. If they qualify the review process, they will get back the licence. Until then, it is suspended," Governor Dr Ahsan H Mansur told a press briefing at the BB headquarters on the day.
In fact, he said, Nagad is yet to be prepared for starting digital banking activities as they did nothing with respect to beginning the digital banking operations even after getting the licence.
"If it is reconstructed properly and stands strong on its own foot in the market and applies again, it will be considered for the operations of digital banking," Mr Mansur said.
The Financial Express (FE) first ran a news report over possible cancellation of Nagad's digital banking licence on August 12, 2024 under the headline 'Nagad digital bank faces nemesis; licence cancellation under process: BB sources'.
The central bank awarded digital banking licence to Nagad in October last year, but there was an allegation that the MFS provider availed the licence bypassing the existing rules, following interventions by two influential persons linked to the recently ousted Awami League government.
Regarding rejuvenation of the Nagad mobile financial service (MFS), the BB governor said they appointed the administrator and his supporting hands to the MFS on two perspectives - immediate terms and long terms.
In the immediate terms, he said, the central bank wants to protect the depositors so that no client of the service provider is cheated. "I want to assure all the clients that they will get all the benefits they are supposed to receive," he said.
About the long-term planning, the governor said the banking regulator wants to help the MFS provider to transform it as a transparent, compliant and internationally-recognised entity like bKash to ensure fair competition in the market.
"We don't want to destroy it, rather we want to strengthen it further," he added.
Criticising Nagad's business procedure, the BB governor said the MFS somehow managed to convince the immediate past government to get government's cash transfer facilities without any competition.
"We don't want any biased favour to anyone. We want a competitive market so that customers can get more services at lower costs. But the point I want to make here is that there will be no immediate change," he said.
Meanwhile, Bangladesh Bank (BB) would continue its support to expand the mobile financial services business of Nagad in the coming days, its newly appointed administrator said, dispelling rumours about the company's possible shutdown.
"The central bank is working towards ensuring the company's further development," said Muhammad Badiuzzaman Didar, who is also a director at the BB.
He said the BB does not have any move to shut down Nagad, one of the country's leading mobile financial services providers.
Mr Didar was addressing a press briefing at Nagad Ltd's headquarters in the capital after taking charge of the company on Thursday, a day after his appointment and other associates.
Their (administrator associates) main goal is to stop all the negative propaganda against Nagad and help the company move forward.
The BB also appointed additional director Md. Habibur Rahman, joint directors Anwar Ullah, Palash Mondal, Abu Sadat Mohammad Yasin (ICT); deputy director (ICT) Chayan Biswas, and deputy director Md. Ayub Khan as the associate of the administrator.
Besides, three officials from the Postal Department have been assigned to Nagad's office. On Thursday morning, all the 10 officials took charge of their responsibilities.
Mr Didar mentioned that some rumours are spreading about the Postal Department's digital financial service, Nagad, which is a massive institution with over 95 million customers.
"If this institution is harmed by such rumours, the country's economy will suffer too. So, we are here to put an end to all types of rumours and further build customer trust. Bangladesh Bank has not stepped in to shut down; we are here to assist Nagad in moving forward."
The administrator clarified that none of the Nagad's services, activities, or progress would be halted for even a moment and said its operations will continue as usual - be it disbursements of allowances, day-to-day transactions, or payment processing.
"We are here to work towards making it even a larger company."
In response to a question, Mr Didar said that they have no intention to interfere with Nagad's regular activities, and will not try to create any instability in human resources or other assets.
Director of Bangladesh Postal Department Abu Taleb said: "Over the last five years, there has been no discrepancy in the digital transactions managed by Nagad under the Postal Department. Like other services of the Postal Department, this is a specialised digital financial service."
Addressing the press briefing, executive director of Nagad Ltd. Md. Shafayet Alam welcomed the appointment of this administrator and said it was a timely and groundbreaking step by the government.
They will play a direct role in restoring customers' confidence, countering the negative propaganda against Nagad, he added.
Associates of the administrator, representatives from the Postal Department, and Nagad's additional managing director Mohammad Aminul Haque were also present at the event.
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