Nagad Finance gets final nod of Cen Bank
According to rules, an MFS company cannot exist on its own but has to be a subsidiary of another financial institution
The Bangladesh Bank has given final approval to a proposed non-bank financial institution (NBFI) named Nagad Finance PLC, clearing the way for Nagad Ltd to provide mobile financial services.
Nagad is a mobile financial service (MFS) brand of the Bangladesh Post Office.
Md Mezbaul Haque, the executive director of the Bangladesh Bank, told The Business Standard (TBS) that the approval decision was taken in the board meeting chaired by Central Bank Governor Abdur Rauf Talukder on Sunday.
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He also said that Nagad will have to get a new MFS license from the central bank to run its MFS operations.
The central bank, in principle, approved Naqad Finance PLC on 30 July last year.
Muhammad Farid Khan, the vice chairman of Summit Group, will be the chairman of the proposed company. Tanvir A Mishuk, managing director of Nagad Ltd, is also the director of the proposed NBFI. Apart from this, the company has nine other directors whose identity has not been disclosed yet.
A top manager of the Bangladesh Bank, on the condition of anonymity, told TBS that one of the conditions for approval was that Nagad Finance has to bring in more than 90% of its investment from abroad to increase foreign currency inflow.
An NBFI is required to have a paid-up capital of Tk100 crore as per the Finance Institution Act.
According to the regulations, an MFS company cannot exist on its own but has to be a subsidiary of another financial institution or government entity. For example, bKash is a subsidiary of Brac Bank and Rocket of Dutch-Bangla Bank.
Under this situation, since Nagad as an MFS cannot operate alone, it has applied to the Bangladesh Bank to operate under a non-bank financial institution.
The Bangladesh Bank has given consent for a new NBFI at a time when most of the existing NBFIs are struggling to survive in a saturated market.
Of the country's 35 NBFIs, only 10 are running in good health and the rest are in severe financial crisis due to corruption and irregularities.
One such ailing NBFI named People's Leasing and Financial Services Limited was liquidated due to its inability to pay back depositors' money.
Nagad started its journey as a mobile financial service of the Bangladesh Post Office in 2019. In terms of the number of subscribers, Nagad currently has a market share of 30% and its current subscriber base is more than four crore.
