Nagad received an extension of its interim licence for mobile financial service (MFS) operations for the sixth time as it could not form a subsidiary with the Bangladesh Post Office, a prerequisite to getting a full licence.
The Bangladesh Bank extended the interim licence, which was set to expire on 30 September this year, for one year till next September.
The central bank had issued a temporary licence to run a mobile financial service to the post office and Nagad has been operating under it since March 2019.
According to the regulations, an MFS company cannot exist on its own but has to be a subsidiary of another financial institution or government entity. For example, bKash is a subsidiary of the Brac Bank and Rocket of the Dutch-Bangla Bank.
To get a full licence, the Bangladesh Post Office has to form a company to run Nagad as its subsidiary. Despite obtaining an extension for the sixth time, Nagad could still not become a subsidiary of the Bangladesh Post Office.
Since Nagad cannot operate alone as an MFS, it has applied to the Bangladesh Bank to operate as a non-bank financial institution under which it will work as a subsidiary to legalise its operation.
The Bangladesh Bank has recently issued a letter of intent to Nagad for a licence of a non-bank financial institution (NBFI) named Nagad Finance PLC under which it will form a subsidiary to legitimatise its operation.
Nagad became the second largest MFS in the country, boasting 53 million customers within just two years and a quarter after it started its journey. The daily transaction of the company is around Tk700 crore, according to its website.