No bank can make transactions with unapproved digital payment systems 

The Bangladesh Bank has prohibited banks from making any transactions with mobile financial services, payment service providers or payment service operators that have not been approved by the central bank. 

Issuing a circular in this regard on Thursday, the Payment Systems Department of the central bank asked banks to abstain from opening custodian accounts, trust cum settlement accounts or any other accounts on behalf of unapproved mobile or electronic wallets, payment service providers (PSPs) or payment service operators (PSOs). 

Unapproved operators of these services will not even get any payment gateway or merchant aggregation service from any licensed institutions, according to the circular.      

An official of the Bangladesh Bank said that at present, Nagad – the digital mobile financial service of the Bangladesh Post Office – is operating without any approval from the central bank. 

The Bangladesh Bank said it has observed some firms running operations like PSP and PSO without any approval, according to the circular. 

If these firms wind up, customers will lose trust on such services. Moreover, if purchases are made through the electronically generated money, it can negatively impact the money market.  

The Bangladesh Bank has issued this direction in accordance with the Bank Company Act, and it will be effective immediately, the circular reads.  

Central bank officials also said that few PSPs and PSOs have already applied for approval. 

However, despite failing to get approval from the Bangladesh Bank, Nagad introduced its services on November 11, 2018. Third Wave Technologies Limited is running its operations.