Nagad surrenders NBFI licence, opting for digital banking

Nagad, a mobile financial service (MFS) provider, has surrendered its non-bank financial institutions (NBFI) licence to the Bangladesh Bank which had previously been approved to establish a new financial institution.

According to central bank sources, Nagad took the licence for the purpose of operating Nagad's MFS services under this institution. Now, Nagad has given a letter to the central bank surrendering this licence.

Speaking to the Business Standard, Tanvir A Mishuk, founder and managing director of Nagad, said, "We will now take a licence for digital banking. Meanwhile, the licence of establishing a new NBFI has been surrendered. We are not looking to bring in new NBFIs now."

Nagad decided to surrender the licence of the institution to Bangladesh Bank and change the name of the company to 'Nagad Digital Bank PLC' during a special general meeting on 26 June, reads the letter. 

Mentioning the reason for surrendering the licence, the letter furthered that immediately after obtaining the licence of the financial institution, the policy for establishing a digital bank was issued by the Banking Regulations and Policy Department of the Bangladesh Bank on 15 June this year.

Through this, initiatives were taken to make the financial sector more effective, stronger and safer by expanding the horizons of providing various financial services through the use of innovative and digital technology in the country's financial sector.

Since its establishment, Nagad has been providing mobile banking services as an institution of the postal department. However, to conduct mobile banking activities in the country, the MFS has to be a subsidiary of any bank. 

So, to solve the existing problem Nagad proposed opening a financial institution and running MFS services as its subsidiary. 

Accordingly, in February last year, new provisions were added to the Bangladesh Bank's MFS Regulations 2022 to allow banks, non-bank financial institutions and any government-owned institution to open subsidiaries or associate companies for MFS.

The Bangladesh Bank issued a circular on 17 May under the policy, according to which, Nagad got a licence to start a financial institution named 'Nagad Finance PLC'. 

Prior to this, the final licence of Nagad Finance PLC as a financial institution was approved in the meeting of the board of directors of the Bangladesh Bank on 1 April. 

Before commencing business operations, Nagad Finance PLC sent a letter to the governor of the Bangladesh Bank on 10 July requesting to surrender the licence of the financial institution.