Post office has no capacity to run Nagad, we're looking for private investors: BB governor

The Bangladesh Bank has launched several initiatives to build a cashless society. At the same time, to ensure greater female participation, it has mandated that 50% of agents in agent banking be women.

In an interview with The Business Standard, Bangladesh Bank Governor and economist Ahsan H Mansur discussed financial inclusion and the future of a cashless society. The interview was conducted by Special Correspondent Jebun Nesa Alo and Staff Correspondent Sakhawat Prince.

What are your plans for digital banks? Are new licences coming?

We do have plans. We're moving forward with digital banks very soon. Perhaps by August, we will invite new applications. Those who applied previously can apply again, and we will move swiftly into the selection phase.

It's hard to say right now how many licences will be issued. That will depend on the strength of the applications. It won't be too many — we'll proceed gradually.

Are you considering new policies for digital banks or MFS (mobile financial services)?

MFS is not a bank. They cannot directly take deposits. If someone wants to offer nano loans, it must be done through a bank.

Currently, loans up to Tk50,000 are given through MFS. This could be increased to Tk1,00,000; Tk1,50,000, or even Tk5,00,000 in future. But MFS platforms cannot disburse these directly — they must either set up a digital bank subsidiary or obtain a separate licence. Those seeking licences must demonstrate capacity, investment, and competence.

What is your long-term vision for digital banks?

Anyone interested in operating a digital bank must bring in significant investment. Establishing a fully functioning digital bank could require Tk2,000–3,000 crore. Entrepreneurs must bring this capital and have a long-term vision.

It took bKash 12 years to become profitable. Nagad may take 10. So without patient capital and long-term planning, success is unlikely.

Do you have any specific plans regarding Nagad MFS?

There's been a lot of corruption at Nagad. It was also operating illegally for a long time. Bangladesh Bank deserves some credit for not granting it a full licence — we issued only a temporary one under political pressure.

The main violation is this: the post office is not a financial institution. It simply doesn't have the capacity to operate a tech platform like Nagad.

They can't even handle parcel services — something that sustains postal departments worldwide. But our post office has zero parcel business.

Legal proceedings are ongoing, and the institution has suffered financial losses. A High Court stay order even blocked our move to appoint an administrator. During those 10–15 days, they misused significant funds again. We later overturned the order through the Supreme Court and regained control.

How much financial irregularity has been found at Nagad?

Nagad's former board illegally created Tk630 crore in liabilities, which funded a lavish lifestyle. Our preliminary estimates suggest over Tk1,700 crore was misused. Funds from the Ministry of Social Welfare's social safety net programmes were diverted rather than disbursed to beneficiaries.

The platform must be transferred to a private investor quickly. Bangladesh Bank has no interest in running it. Its IT system is weak and may collapse at any time. Revamping it would require thousands of crores — which must come from external investors. Some domestic and foreign parties have already shown interest, and we are working with them.

You've been working on financial inclusion and building a cashless society for a while. What progress do you see now?

We've made significant progress with MFS — Tk5,000–6,000 crore is transacted daily. But 75% of that is just cash-in/cash-out. For instance, someone sends money from Dhaka, and it's withdrawn in cash at the village. So the overall cash flow in the economy hasn't declined.

Take the recent Eid-ul-Adha – an extra Tk35,000 crore in cash was required, mainly for cattle markets. Every year, cash demand rises 9–10%. So despite the convenience of digital transactions, we haven't made the economy cashless.

Unless we enable digital transactions at the level of shopkeepers, rickshaw pullers, and corner stores, cash will remain king. This segment is a critical part of our financial inclusion strategy.

What initiatives are being taken to build a cashless society?

We're working on multiple fronts. For example, credit cards. Previously, one needed an income tax ID and had to prove tax payments, which made it unnecessarily complicated. As a result, Bangladesh had the lowest credit card penetration in South Asia.

Now, the new budget has removed these restrictions. We hope this will change things. We're asking bankers to issue debit cards universally and offer credit cards more freely — keep the limits, but make them accessible.

Another key area is QR codes. These are widely used globally, especially in Africa, India, Nepal, and Bhutan. But Bangladesh has yet to popularise it. Although we have QR codes, they aren't widely used — that must change.

Can QR code usage really be scaled up?

Absolutely. QR codes are used widely even in countries like Nepal and across Africa. We're considering making QR codes mandatory for businesses to obtain a trade licence. This would encourage digital payments among consumers.

How much does Bangladesh Bank spend on cash management?

The total annual cost of cash handling in Bangladesh is about Tk20,000 crore — including Bangladesh Bank and all other banks. Thousands of people are involved in cash management. Heavy-duty cash counting machines cost crores.

This year, we allocated Tk600 crore just to print new currency notes. But what do we get in return? Nothing. On the contrary, more cash means more tax evasion, corruption, and illicit money. Going cashless is essential for our economy.

Any new initiatives for financial inclusion?

 We want to make school banking more effective. All banks have been instructed to bring students from nearby schools under banking services. They must open accounts for each student with just Tk200. This will initiate financial inclusion from a young age.

We've also taken several initiatives to advance financial inclusion. If someone owns a mobile phone, they can bank via apps. If not, we'll issue a debit card. We're also emphasising financial literacy — how to access and use services must be taught.

This benefits banks too. Once a client joins the banking system, they often stay for life. So banks have strong incentives here.

What are you doing to ensure women's participation in financial inclusion?

Women are the most excluded group in financial inclusion. That's why we're using agent banking as a strong channel. There are currently 20,000 agents — a number achieved in just 10 years. We hope it will soon cross 25,000.

Our goal is to have at least one agent per village. We've made it easier to approve new agents — banks can recruit as many as they like. One crucial rule now is that 50% of new agents must be women.

The reason is simple. A female agent can enter homes and open accounts for other women, even collect deposits — things a male agent often can't do. This also means their husbands or in-laws don't need to know. It allows rural and house-bound women to be financially included.

Any plans to make mobile phones more affordable for inclusion?

Yes, we've formed a committee with mobile companies, bankers, and manufacturers. Our goal is to introduce basic smartphones in the Tk5,000–6,000 range — just enough for calls, internet, banking, and MFS apps.

These phones can be bought in installments — perhaps Tk100 per week. We're already in talks with Walton and a few other manufacturers.

What has been your hardest and happiest experience as Governor?

 The hardest part is that I've made some unintended enemies. There have been personal and family attacks — even attempts at character assassination. It's very painful.

The most fulfilling part is knowing my family has sacrificed a lot so I can serve the country. Gaining public trust and doing something meaningful for the nation is the greatest reward.

What's your biggest lesson from this journey?

There's a Bangla saying, "The duck swims, but water doesn't stick to its feathers." We must live like that — not let the surrounding mud stick. That's the biggest challenge and the biggest lesson.

Gaining public trust isn't easy, but it's possible. Even in hard times, one can work honestly. The mud will always be there — our task is not to let it stain us.

On the bright side, this position has been a once-in-a-lifetime opportunity. Things I used to criticise from my global experience, I now get to address. I also thank the government; they haven't interfered. That has allowed me to work independently.

I'm still in the office. My family is alone at home. This 24/7 life isn't ideal for health; I know that. But as long as I can, in or out of government, I want to continue serving the country.