Trust Bank and Malaysian telecommunications conglomerate Axiata Group Berhad have secured the initial approval from the Bangladesh Bank to run a mobile financial service.
Trust Bank and Axiata are in the process of forming a subsidiary company as per the regulatory requirements.
As the mobile financial service is designed to be led by a bank, Trust Bank’s stake in the subsidiary company would be 51 per cent.
Axiata, parent company of the country’s second largest telecom operator Robi Axiata, would have a stake of 49 per cent in the subsidiary company.
The Axiata Group holds 68.7 per cent stake in Robi after its merger with Airtel.
Although Robi’s parent company has finally managed to become part of the MFS, the mobile phone operators were earlier denied the licence by the central bank.
Last year, the BB even rejected a Bank Asia proposal to bring together two mobile phone operators in the agent banking service.
Speaking about the licence issuance, Bangladesh Bank general manager Md Mezbaul Haque told New Age that the central bank had issued a new MFS licence as they fulfilled all the regulatory requirements.
After receiving the BB’s initial consent, the entity is supposed to commence operation within one year, Mezbaul said.
At present, 15 entities hold the valid licence issued by the central bank to run an MFS.
Of the entities, Bkash, a subsidiary of BRAC Bank, holds the majority of the market share followed by Rocket, a mobile finance service of Dutch-Bangla Bank.
Apart from Bkash and Rocket and a few others, activities of other MFS licensees, each of whom hold varying but insignificant shares of the market, are less visible.
Due to its inactivity, the central bank has revoked the MFS licence of NCC Bank.
Other than those who have been issued the BB licence, Nagad, a joint venture of the Bangladesh Post Office and Third Wave Technologies Limited, has been gaining ground in the market in the MFS segment.
Once the BB issues the final approval to Trust Bank, the number of MFS licensees would be 16.
Speaking about the bank’s preparedness to launch an MFS, Trust Bank managing director Faruq Mainuddin Ahmed said, ‘Our plan was to launch the service by March this year but the outbreak of the coronavirus has caused us to postpone it.’
‘Now, it will fully depend on the development of the coronavirus situation,’ he said, adding, ‘Yet, the bank is in the process of fulfilling all the regulatory requirements, including completion of the subsidiary formation.’
The Bangladesh Bank has set the minimum paid-up capital requirement at Tk 25 crore in the Bangladesh Mobile Financial Services (MFS) Regulations, 2018.
Besides, the MFS providers will have to build up a ‘capital reserve’ equal to the amount of the paid-up capital from its retained earnings.
Asked whether the brand name of the mobile financial service had been set, Faruq said that the entity was yet to make a final decision in this regard.
He, however, said that the existing digital wallet service of Trust Bank, t-cash, would be merged with the MFS service.
Since the introduction of the MFS in 2011, the country has experienced a robust growth in the number of account holders, volume and amount of transactions in MFS.
The daily average transaction through MFS stands at Tk 1,425.34 crore now.
The number of MFS accounts opened by customers increased to 8.19 crore at the end of February this year.
Of the accounts, 2.71 crore MFS accounts were active with the daily average transaction volume standing at 77.97 lakh, the BB statistics showed.