Nagad gets extension for sixth time

The Bangladesh Bank has once again renewed the interim licence of Nagad as the Bangladesh Post Office (BPO) could not form a subsidiary to run the mobile financial service within the deadline.

This is the sixth extension since the state-run agency secured provisional approval from the central bank in March 2020. This time, the interim licence has been extended for a year.

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It came on September 25 after the Directorate of Posts had sought the extension, said a BB official.

Nagad has been operating without a full-fledged licence since its inception in March 2019. It has more than six crore customers and facilitates transactions of around Tk 750 crore daily.

Recently, the BB has started taking into account users' number and transaction figures of Nagad while preparing the data for the entire MFS industry.

Md Siraz Uddin, director-general of the Directorate of Posts, could not be reached for comments.

On April 2 after getting the extension for the fifth time, he told The Daily Star that he was hopeful that all procedures might be completed within the deadline, set to expire this month, to set up the subsidiary.

The Directorate of Posts had sent documents to the posts, telecommunication & information technology ministry. The documents might have been sent to the law ministry for vetting in order to amend laws, he had said.

Laws would have to be amended because existing rules don't allow the BPO to set up such a company.

The government has already moved to amend the Post Office Act, 1898 and the Post Office (Amendment) Act 2010. As per the central bank, the BPO is supposed to establish a subsidiary to run the MFS in a model similar to a public-private partnership.

The government agency is expected to hold a 51 per cent stake in the subsidiary while Nagad Ltd, a private company, will own the rest.

"Nagad is now in the process of getting a full-fledged licence to run its business operation. It will take some time to complete the entire regulatory process," said Muhammad Zahidul Islam, head of public communications at Nagad.

"We are optimistic to complete all procedures within the extended time."

Nagad is an MFS brand of the BPO. It is operated by Third Wave Technologies Ltd, which renamed itself Nagad Ltd in February last year.

The private firm provides service to the BPO under a revenue-sharing model. The state-run agency gets 51 per cent of the revenue and Nagad receives the remainder.

On August 30, the central bank gave a letter of intent to the investors of Nagad Ltd to form a non-bank financial institution named Nagad Finance.

As per the business plan, Nagad Finance will promote its products and services through Nagad Ltd.