Governor pledges 'smooth' management transition for Nagad

Bangladesh Bank Governor Md Mostaqur Rahman has assured that the withdrawal of the central bank-appointed administrator from Nagad will be a seamless process, explicitly ruling out the possibility of any unauthorised or "overnight" takeover of the mobile financial service provider.

The assurance came today (4 March) after the administrator team of Nagad briefed the governor on the company's current status, according to a senior official of Bangladesh Bank.

At present, Md Motasem Billah, a director of Bangladesh Bank, is serving as administrator at Nagad.

Central bank spokesperson Arief Hossain Khan told TBS that a special inspection at Nagad had uncovered extensive irregularities, while members of the previous board remain absent. He reiterated that the institution is owned by the Department of Posts.

"Nagad has not yet received a full licence from the Bangladesh Bank and is operating under an interim approval. We appointed an administrator because transactions involving nearly 4-5 crore customers are linked to this institution," he said.

The spokesperson alleged that parties outside the Department of Posts who previously held ownership stakes had engaged in such significant irregularities that, if the company were valued today, their net assets would be deeply negative. "There is no scope for them to return," he added.

Search for foreign investors

In August last year, former governor Ahsan H Mansur had said at an event in Dhaka that the government had decided to transfer Nagad to the private sector.

Subsequently, during the final phase of the interim government, Jamaat-e-Islami MP Barrister Mir Ahmad Bin Quasem Arman expressed interest on behalf of a foreign entity in investing in Nagad.

At the time, it was stated that if any credible foreign investor showed interest, necessary steps would be taken in coordination with the government.

Under the current governor, a fresh meeting was held today with Nagad's administrators to review the institution's position.

Forensic findings

Following the fall of the Awami League government on 5 August 2024, the Bangladesh Bank had decided on 21 August to appoint an administrator to oversee Nagad. The following day, central bank director Muhammad Badiuzzaman Dider was appointed administrator, alongside six supporting officials.

A subsequent inspection by the central bank found evidence of financial fraud through the creation of fictitious distributors and agents, as well as the issuance of excess electronic money without corresponding cash backing. The inspection identified discrepancies amounting to Tk2,356 crore.

The administrator at the time prepared a list of six officials allegedly responsible for creating unauthorised distributors and forwarded it to the Department of Posts for legal action. Letters were also sent seeking action against individuals involved in Nagad's operations.

The administrator team further informed the postal authorities that Tk1,711 crore had been siphoned off through 41 distributor accounts opened without approval. These accounts were reportedly designated for the distribution of government allowances.

In June last year, the Bangladesh Bank stated in a press release that Nagad had issued at least Tk645 crore in electronic money without depositing equivalent funds, causing financial losses to the Department of Posts and, by extension, the government.

Under the Bangladesh Bank Order, 1972, the sole authority to issue money on behalf of the state rests with the central bank.

The spokesperson said an internationally reputed audit firm KPMG has been engaged to complete a full forensic audit of Nagad. The findings of the international firm have reportedly corroborated the irregularities detected by the central bank's inspection team.

Following 5 August 2024, the chief executive officer Tanvir Ahmed ceased attending office. Executive directors Niaz Morshed (Elite) and Maruful Islam (Jhalak), deputy chief marketing officer Khandaker Mohammad Solaiman (Solaiman Sukhan), and human resources official Anik Barua were also absent. 

After the administrator assumed charge on 21 August, they were dismissed. Several of the dismissed individuals were linked to ownership of Nagad.