Nagad Finance gets final nod of Central Bank
On Sunday, the board meeting chaired by Central Bank Governor Abdur Rauf Talukder approved the proposed non-bank financial institution (NBFI) named Nagad Finance PLC, allowing Nagad Ltd to offer mobile financial services.
Nagad is a mobile financial service (MFS) brand operated by the Bangladesh Post Office. Md Mezbaul Haque, Executive Director of the Bangladesh Bank, informed The Business Standard (TBS) about the approval decision.
Md Mezbaul Haque stated that Nagad would need to obtain a new MFS license from the Central Bank to operate its MFS services. It is worth noting that the Central Bank had given initial approval to Nagad Finance PLC on 30 July of the previous year.
Muhammad Farid Khan, the Vice Chairman of Summit Group, has been appointed as the Chairman of the proposed Nagad Finance PLC. Tanvir A Mishuk, Managing Director of Nagad Ltd, is also a Director of the new NBFI. The company has nine other directors who have not been identified yet.
A senior executive of the Bangladesh Bank, speaking anonymously to TBS, revealed that one of the conditions for approval was that Nagad Finance must source more than 90% of its investment from overseas to boost foreign currency inflows. As per the Financial Institution Act, an NBFI is required to have a paid-up capital of Tk100 crore.
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According to regulations, an MFS company must operate as a subsidiary of another financial institution or government entity. For instance, bKash operates as a subsidiary of Brac Bank and Rocket of Dutch-Bangla Bank. Since Nagad cannot operate alone as an MFS company, it has applied to the Bangladesh Bank to operate as an NBFI.
The Bangladesh Bank has granted approval for a new NBFI at a time when most existing NBFIs are struggling in a saturated market. Only 10 of the country’s 35 NBFIs are operating in good health, while the others are in serious financial distress due to corruption and irregularities. People’s Leasing and Financial Services Limited, one such ailing NBFI, was liquidated because it was unable to repay depositors’ funds.
Nagad began operating as a mobile financial service of the Bangladesh Post Office in 2019. It currently holds a 30% market share in terms of subscribers and has a subscriber base of over four crore.
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