BB concerned over security of nearly Tk 10,000 crore tied up in MFS
With the increasing number of mobile financial service (MFS) accounts and the amount of unused money or deposits, the stature of e-money is constantly growing in Bangladesh.
The
Bangladesh Bank (BB) sees this rapid growth of e-money as abnormal. The central
bank is also concerned about the proper use of funds deposited with MFS service
providers.
The
experts fear that many people in the country will be affected if a large MFS
service provider crashes. There is also a fear of losing discipline in the
financial sector.
At
the end of June 2021, the number of registered customers of MFS companies stood
at 9.97 crore. But half the accounts of this huge customer base are not active.
In June the number of active account holders was 4.09 crore.
At
the end of June, the combined balance sheet of all MFS accounts held Tk 9,200
crore. About 85 percent of the amount is under the control of the largest
player, bKash, which enjoys close to 50% market share. At present, the number
of registered customers of bKash is more than 5 crore.
Coronavirus
has pushed people's reliance on MFS providers such as bKash, Rocket and Nagad.
As a result, the number of customers in mobile banking is increasing in the
pandemic period.
At
the same time, the amount of transactions is also increasing. Mobile banking is
now an easy and popular service in the country due to the convenience of
instant transactions.
However,
the former governor of Bangladesh Bank Dr. Salehuddin Ahmed said that it is not
right to have so much money tied up in MFS.
He
told UNB that MFS companies are never like banks. These institutions are only
being used as a means of transferring and paying customers. Depositing so much
money at MFS is against financial norms.
Dr.
Salehuddin said the central bank does not have direct control over MFS
institutions.
“Unclaimed
deposits in the bank have to be deposited in the central bank. It is unknown at
this time what will be unclaimed deposits in the MFS. It will be the
responsibility of Bangladesh Bank to look after the portfolio of MFS,”
he added.
Customers
need to be encouraged to withdraw money by identifying accounts that have not
been cashing out for a long time, he said.
“If this
does not work, then the money deposited as unused needs to be taken under the
control of the central bank. The implementation of monetary policy targets will
also be hampered if huge sums of money are concentrated in MFS institutions,”
Salehuddin said.
Kamal
Quadir, chief executive officer of bKash, categorically said all bKash
customers' money is safe. "According to government policy, we have to
invest 25 percent of our customers' money in treasury bill-bonds," he told
UNB.
At
present, 35 percent of the money has been invested to that end. “All
the money of our customers is safe. It remains to be seen whether other
institutions will invest in the policy,” Kamal
said.
According
to the latest statistics Bangladesh Bank (BB) on MFS, customers have transacted
Tk 65,141 crore through mobile banking in September this year. In other words,
the average daily turnover stood at Tk 2121 crore.
The
average daily turnover in August was Tk 2,007 crore. The total turnover in that
month (August) was Tk 62,230 crore. However, the information of Nagad, a joint
venture involving the postal department, was not included in this measure as
Nagad is yet to come under the BB control.
According
to the latest data, there are currently 13 banks operating mobile banking
services. In September, Tk 19,777 crore rupees was deposited (cash in) through
mobile banking services. At this time Tk 16,463 crore has been withdrawn (cash
out). During the period under review, Tk 19,794 crore was sent from individual
accounts (send money) using mobile banking services.
In
September, Tk 2,936 crore was paid for purchases through mobile banking
services. At that time the amount of social security allowance was reduced to
Tk19.20 crore. A total of Tk 2,458 crore has been transacted through mobile
banking for payment of salaries, Tk 652 crore for mobile phone balance
recharge, and payment of bills for various services including gas, electricity
and water were transacted to the tune of Tk 1331 crore.
The
BB’s
payment systems department General Manager Mejbaul Haque said that the number
of customers in MFS service is constantly increasing. Every customer has some
money deposited. That is why the status of e-money in the MFS companies is
increasing.
However,
several central bank officials believe the type of transactions that are made
using mobile banking services should not lead to the volume of money being
directed to the MFS sector. It is not safe for MFS companies to have a balance
ofTk10,000 crore, they feel.
In
recent times, there has been a lot of controversy surrounding e-commerce, money
laundering and lack of trust. In this situation, if any MFS institution is
closed down, it may not be possible for everyone involved to retrieve the money
they have put in.