Postal department seeks time extension from BB to run Nagad

Once again the government’s postal department has sought extension of time from the central bank to run Nagad as a mobile financial services (MFS) provider.

This will be the third extension of no-objection-certificate, if Bangladesh Bank allows.

“We have received an application for extension of time. We are reviewing the proposal, no decision has been taken yet,” Serajul Islam, executive director and spokesman of BB, told the Business Insider Bangladesh.

The BB first gave the MFS operator an NOC for six months in April 2020 when the country was in complete lockdown in the wake of rising coronavirus cases. Later, it was extended twice, which will expire on June 30.

Nagad, which is a joint-venture of the Bangladesh Post Office and Nagad Ltd, was being run as a MFS provider without having a mandatory licence from the central bank.

The BB granted Nagad a temporary approval for six months on conditions that it will comply with proper rules and regulations.

Earlier this month, the Department of Posts and Telecommunications held a meeting in this regard in the presence of representatives of Bangladesh Bank and the Ministry of Finance. It was decided at the meeting chaired by the secretary of the department Md. Afzal Hossain to apply for extension of time.

“The government is in the process of making Nagad a subsidiary of the Postal Department, but some long-term issues, such as amending the laws and approval of the Prime Minister are necessary in this regard,” according to the meeting minutes.

Officials said it took extra time to complete the formation of the subsidiary company due to the general public holiday amid the Covid 19 pandemic.

The Memorandum of Association, Article of Association and Vendor Agreement have already been drafted to form the subsidiary company, it is awaiting final approval from the government, they said.

The interim approval given by Bangladesh Bank for Nagad operation would expire on June 30. In that case, to keep the Nagad service continuing for the 5 crore customers it was decided to apply for an extension with the consent of all the members of the meeting, they added.

At present, the MFS operator is transacting more than Tk 6.5 crore daily. Moreover, in situations like Covid, the MFS operator has responded by distributing government social security programme allowances and other government assistance.