Nagad's digital banking licence suspended
Fair competition among mobile financial service providers to be ensured, Cenbank governor says
![BB governor at a press conference today on 21 Aug. Photo: TBS](https://www.tbsnews.net/sites/default/files/styles/big_2/public/images/2024/08/22/454547090_1732128850926880_7330810284033684789_n.jpg)
The licence for Nagad Digital Bank PLC has been suspended and the Bangladesh Bank will review the process, Bangladesh Bank Governor Ahsan H Mansur said today.
"If it qualifies as per the central bank's review process, it will receive the licence back," he told reporters at a press briefing.
Due to various irregularities and corruption, an administrator has been appointed to the institution, said the governor. "The organisation was previously managed under the name of the Postal Department, but it was taken over by the government for public interest. Therefore, Nagad is now a fully government-owned entity."
From now on, Nagad will be managed by the Bangladesh Bank on behalf of the Postal Department, he said. All existing customer benefits will remain in place, so there is no reason for customers to be concerned, Mansur said.
Nagad will be developed into a more transparent and internationally standard organisation, he said. "We aim for it to be on par with services like Nagad and bKash. We need to increase competition, and it should be fair competition.
The governor said, "The previous government provided many benefits to Nagad, particularly by distributing most government allowances through Nagad. To prevent such favouritism and ensure parallel competition, we want to ensure fair practices. All operations of the institution will continue as they were before, with no changes."
Currently, mobile financial services (MFS) handle transactions nearing Tk5,000 crore. This amounts to approximately Tk1.5 lakh crore in monthly transactions and Tk18 lakh crore annually. We believe that this will increase tenfold in the future. Increased competition will enhance service quality and reduce costs.
We aim to take online transactions to a level where cash withdrawals are no longer necessary. We want to consign the cash-out system to the museum. If money is deposited once and spent directly from there, the need for cash withdrawals will be eliminated, and costs will decrease.
The creation of electronic money and various practices that were previously done illegally were not appropriate. However, Nagad is not the only institution where irregularities have occurred; there have been many other institutions with similar issues. We prefer not to look back but to focus on achieving positive outcomes moving forward.
Asked by journalists regarding alleged large-scale money laundering through Nagad and the discrepancy of Tk700 crore, the governor said they will first conduct an audit to determine the extent of irregularities.
"We will investigate whether money laundering occurred and assess the profit and loss situation. The subsequent board will then take action against those responsible for the irregularities," he said.
In response to a question about whether any measures would be taken against Bangladesh Bank officials who may have facilitated irregularities and corruption, the governor said, "Many people did things out of fear for their jobs; they were instructed to do so. If we put them all in jail, it won't solve everything. We want to move forward and prefer not to dwell too much on the past."
Regarding irregularities, corruption, and board instability in various banks, Mansur said that the Banking Commission will conduct audits to review the conditions of the banks. "Efforts will be made to recover misappropriated assets. This includes retrieving assets that have been laundered abroad and those within the country, aiming to reconcile liabilities."
On the issue of new loans from international lending agencies, the governor said due to current financial needs, they will request the IMF, the ADB, and the World Bank to expand the scope of existing loan programmes.
"We will ask the IMF to consider increasing its aid package to match the $7 billion being provided to Pakistan," he said.