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1. 1
Mobile Financial Services: Overview,
Policy and Current Scenario
K.M.Abdul Wadood
General Manager
Payment System Department
Bangladesh Bank
(Central Bank of Bangladesh)

2. 2
Banking Industry in Bangladesh
In Bangladesh,
Banking is traditionally branch-based concentrated mainly in
the urban areas
There are about 8800 Bank Branches of 56 Banks
for 160 million people
Customers need to come to bank-branches
ATM booths can not be installed in the remote and rural area
of the country
Setup of branches is not profitable in the rural areas

3. 3
Bangladesh Bank Choose MFS as a tool of
Financial Inclusion
 Vast majority of our population live in the rural area and
outside the coverage of traditional banking services.
 For the banks it is very much costly to establish bank
branches in the rural areas.
 Mobile phones an act as an easy, safe and widely
available access channel to banking services.
 Rapid growth and wider coverage of mobile network
operator’s (MNOs)

4. MFS Account
 The mobile wallet/MFS account is a
technology that allows users to transfer
money or pay for goods by simply providing
instruction by his mobile phone or swiping or
tapping their mobile phones against a special
reader machine.
 But both parties payer and payee have to have
‘Wallet’/MFS account first at a bank branch
or at their agent outlet. 4

5. MFS Account (contd.)
 Any kind of bill could also be paid through
the MFS service. The government could pay
salaries to its employees cell-phone account.
 “Clients can get the service without going to a
bank branch or agent point in exchange of
some charge for the transaction .
5

6. 6
Legal Authority
 Article 7A(e) of Bangladesh Bank Order, 1972, one
of the functions of Bangladesh Bank is
 "to promote, regulate and ensure a secure and
efficient payment system, including the issue of
bank notes."
 According to Section 4 of Bangladesh Payment and
Settlement Systems Regulations, 2009 Bangladesh
Bank have jurisdiction for licensing, authorizing and
designating payment systems.

7. 7
Regulation on MFS
• In 2011, Bangladesh Bank issue regulation
that mobile financial services will be bank led.
• Within the Bangladesh Bank regulations,
banks are allows to use mobile financial
services for:
• payments in / out
• transferring inward remittances

8. Regulation on MFS (contd.)
• person to person payments (P2P)
• person to business payments (P2B)
• business to person payments (B2P)
• person to government payments (P2G)
• government to person payments (G2P)
• other payments
(microfinance, insurance premiums, etc)
8

9. 9
Mobile Account
 Under the Guidelines customer account, termed
"Mobile Account" will rest with the bank and will be
accessible through customers’ mobile device.
 This Account will be a non-chequing limited
purpose account.
 Banks must ensure that a 'Mobile Account' has been
opened for each customer seeking to avail Mobile
Financial Services with all the required documents.
 No MFS facility is permissible without having
mobile a/c.

10. 10
Documents Required by the Banks to have
NOC for MFS
 Application
 MoU with the MNO and Vendor company
- Roles and responsibilities of both parties
- Business model
 Process flow
 Board Approval

11. 11
Anti Money Laundering Issues
 Banks will have to comply with the prevailing
AML/CFT related laws, regulations and guidelines
issued by Bangladesh Bank from time to time.
 Banks shall have
 to use a short 'Know Your Customer (KYC)' format given
in the Guidelines for customers.
 to follow full KYC format for the cash points/agents.
 to develop an IT based automated system to identify
suspicious activity/transaction report (STR/SAR) .

12. 12
Security Issues
 Banks shall have to strictly comply with the
following issues:
 Confidentiality
 Integrity
 Authorization
 All the transactions must be authenticated by the account
holders using their respective Personal Identification
Number (PIN) or similar other secured mechanism.

13. 13
Limits
 P2P transaction- Tk. 10,000/day,
25,000/month.
 Cash in- 5 times/day, 20 times/month
Tk25,000/day, Tk1,50,000/month
 Cash Out- 3 times/day,10 times/month
Tk25,000/day, Tk1,50,000/month

14. 14
Inter-operability
 Banks may link their mobile financial services
with those of other banks.
 Mobile account may be linked with
customer's bank account (if any).
 BB is introducing NPSB, through which MFS
account will be interpretational among banks.

15. 15
Current status of MFS in Bangladesh
Up to August’2014
 No. of Banks got NOC-28
 No. of Banks Launched MFS -19
 No. of agents-4,95,338
 No of registered customers- 191.91 lac
 Average no. of transactions/ day-15 lac
 Average volume of Transaction/ day-247.82 Crore

17. Risk & responsibility
 Banks shall be responsible for mitigation of
all kind of risks such as
 Liquidity Risk
 Operational Risk
 Fraud Risk
 Technical Risk
 Bank will bear all the liabilities on behalf of
their subsidiaries/agents/cash points/partners
17

18. Risk & responsibility (contd.)
 Banks shall be held responsible to protect customer
rights and dispute resolution.
 Banks shall have to disclose risks, responsibilities
and liabilities to the customers through
website/newspaper /printed materials.
 Whenever any customer is dissatisfied by the action
of bank, customer can register complaint with
Bangladesh Bank to mediate the dispute. In that case
decision from Bangladesh Bank will be final.
18

19. Is MFS cost effective ?
 MFS clients used to pay for cash-in & cash-
out as follows:
 BRAC/bkash : BDT (9+9)= BDT18/thousand
 DBBL : BDT (10+10)= BDT 20/ thousand
 IBBL : BDT (0+15)= BDT 15/thousand
 Four Parties share the revenue i.e Agent,
Distributor, MNO & Bank
19

20. Is MFS cost effective ?
 Bangladesh Govt. is observing market economy.
 MNO needs to be well regulated and rational.
 Session based or revenue sharing based
 What would be the cost of maintaining MFS
account, for fund transfer and for balance statement
that depends on competition among the market
players.
 On the other hand how much profit or interest will
be given on the balance of a wallet account that
depends on market competition. 20

21. Financial Services at the Post Office
 Using the postal network to deliver financial services
is not a new idea.
 The first postal account was opened in 1861 when in
the post of the United Kingdom established a postal
savings bank to encourage poor people to save.
 Since then, many posts have followed suit in offering
savings accounts and basic remittance services.
 For over a century, the business model of the postal
savings bank remained essentially unchanged.

22. Financial Services at the Post Office (contd.)
 With over a billion people using the postal
sector for savings and deposit accounts and a
widespread presence in rural and poor areas,
post offices (or “posts”) can play a leading
role in advancing financial inclusion
 Universal Postal Union (UPU) hosting the
Global Forum on Financial Inclusion for
Development is very much encouraging and
highly appreciable. 22

23. 23
Thank You