Cenbank decides to permit MFS providers to bring remittances directly

The Bangladesh Bank has decided to allow mobile financial service providers such as bKash, Rocket and Upay to directly bring remittances sent by Bangladeshi wage earners abroad.

Licensed MFS providers will have to apply to the central bank by 31 December to get the permission.

Among the 13 MFS providers in the country, only Nagad will not be eligible to apply for the permission as it does not have a license and is currently running its operation with an interim permission.

On Tuesday, the Foreign Exchange Policy Department of the Bangladesh Bank issued a circular, allowing licensed MFS providers to repatriate wage remittances in association with internationally recognised online payment gateway service providers, banks, digital wallets, card schemes and aggregators abroad.

According to the circular, MFS providers should have standing arrangements with these counterparts abroad. They will receive foreign currency in their accounts and an equivalent amount of taka will be credited to the wage earners' mobile financial accounts.

Wage earners will have to open mobile financial accounts in taka through proper Electronic Know Your Customer (e-KYC) with validated proof of departure from Bangladesh.

Designated Bangladeshi banks will provide settlement account services to the MFS providers. They will transfer the funds deposited in their Nostro accounts to the settlement accounts of the MFS providers in taka, the circular added.

After receiving the amount in taka, wage earners can use the MFS account from abroad to do all transactions in taka.

A Nostro account is the account of Bangladeshi banks in banks abroad for the transaction of international payments in foreign currency.

Currently, MFS providers bring remittances through a foreign bank or financial institution and deliver the money to the MFS accounts of customers. However, it takes more time for the customer to get the money through the process.

The customers will receive their money quickly through the approved MSFPs once the central bank's decision comes into effect.

A senior official of the central bank told The Business Standard that the initiative by the central bank will ease the repatriation of wage remittances.

"This will support local wallets like bKash and Rocket to repatriate wage remittances. It will also stop the drainage of wage remittance through unofficial channels," he added.

Shamsuddin Haider Dalim, head of corporate communications, bKash, said, "We hope this initiative taken by Bangladesh Bank will further facilitate the wage earners to send remittance in a secure and faster way through digital platforms of the licensed MFS providers. All the necessary steps will be taken to implement the instructions of the regulator."