The leading telco operator of the country, Grameenphone, has been providing mobile banking services for a number of years, in apparent breach of Bangladesh Bank mobile financial services guidelines.
Under its Mobicash Agency Agreement, the operator has been offering “cash in,” “cash out” and balance transfer services, despite notifications from the central bank that such services are in contravention of the Mobile Financial Services guidelines.
The central bank has notified the operator at least three times to stop providing these unapproved services. The first of these notices came in November 2012, followed by two more in January 2013 and August 2014. However, GP continues to offer these services.
In 2010, the central bank gave GP approval under special consideration to provide three specific services: utility bills payment, railway ticketing, and cricket match ticket sales.
Before that, GP had pushed the Bangladesh Bank (BB) for a licence to operate full-blown mobile financial services (MFS), which can only be availed by bank-led models under the existing MFS guidelines.
Although the three services for which GP received approval typically fall under MFS, BB terms them M-Commerce and under this special consideration, GP received approval.
However, in addition, since getting the central bank go-ahead, GP has developed its brand Mobicash and has been providing what would appear to be MFS under this brand.
Rafiq, whose business outlet Mamoni Telecom is located in Dhaka’s Sukrabad, has an agency agreement with Mobicash and he provides cash in, cash out, and balance transfer services alongside bill payment. For these, he uses GP’s Mobicash gateway system.
“A customer has to create a mobile account by registering with a Grameenphone Centre and becomes eligible for availing balance transfer services just like the customers of bKash, Sure Cash, etc do,” Rafiq said.
“I do not see any difference between the services provided by Mobicash, bKash, Sure Cash, etc,” he added.
The Dhaka Tribune obtained a document of Mobicash Agency Agreement and found that it includes five offers: cash in, cash out, balance transfer, bill payment, and ticket selling.
Contacted, Subhankar Saha, executive director of BB, said GP does not have the permission to include the first three of these services in the agency agreement.
This is also an apparent violation of the MFS guidelines, because field agents and banks must have bi-party agreements; agreements between the agents and GP are not enough.
“But they are offering these services as the agent of the six banks with whom they have agreements and who have their own licenced MFS systems,” Subhankar explained.
Agents’ information, accounts, and transactions must be operated and updated by their respective banks.
Banks must ensure real time visibility, control, and capacity to conduct regular reconciliations, settlement, dispute management, and audit without any dependency on a mobile network operator (MNO) or an external party.
The agents who are providing MFS through Mobicash have no direct agreement with banks. As a result mobile accounts of Mobicash agents are not real time and visible to the banks, which is risky for mobile banking sector as this increases the chance of money laundering.
“We have agency agreement with GP, so we do not know what happens behind Mobicash,” said Abul Kashem Md Shirin, deputy managing director of Dutch-Bangla Bank. “If we face any problems, we notify GP.”
He also said: “There are some shortfalls in the implementation of the MFS guidelines. As a result, GP could develop Mobicash as an MFS brand.
“Although Mobicash is working as an MFS-providing agent, but the brand itself can provide only three services. But people do not know that the brand is allowed to provide only three services as an agent.
“MFS guidelines allow service providers to appoint mobile operators or NGOs as agents but do not clarify how the agents will work,” the banker said.
BB Executive Director Subhankar said: “We have some concerns about Mobicash’s activities, as people cannot differentiate the brand from MFS providers. The central bank has addressed some concerns and asked Mobicash to comply.”
The Dhaka Tribune contacted Grameenphone via e-mail to seek its opinion on the allegations. In reply, GP said: “Other than the service approved by Bangladesh Bank, MobiCash outlets do not provide any other services that are GP’s own services. The cash in and cash out services and balance transfer that GP provides are not GP’s own services, but of its partner banks.
“GP acts as a distribution management partner for partner banks and this agreement is submitted to Bangladesh Bank during service launch by our partner banks. GP has also taken due permission from BTRC in this regard.
“The agency agreement between Grameenphone centres and MobiCash outlets was duly vetted by Bangladesh Bank and also given NOC where the agreement itself was mentioned as MobiCash Agency agreement.
“MobiCash is a retail brand that enables easy identification of the outlets by the customers of our partner bank.
“The services that GP provides from MobiCash outlets for our partner banks are very much aligned with the MFS guideline, whereby the role of MNO is specified clearly.”
The first time BB brought the matter to GP’s notice was on November 15, 2012, when it directed the telecom operator not to include cash in, cash out, and cash transfer services in the Mobicash format, as only banks and their subsidiaries are allowed to offer such services under the MFS guidelines.
Again, on January 17, 2013, the banking regulator notified GP to stop those three services, reminding the operator that the central bank reserves the right to suspend the approval if they deem it detrimental to public interest.
A copy of this notice was sent to the CEO of Norway-based Telenor Global Services, the parent company of GP.
The third notification came on August 7, 2014 in the form of a meeting between the central bank and the chief executive officer of GP.
During that meeting, GP CEO Vivek Sood agreed to revise the message of a Mobicash television commercial, which was promoting all the five services.
According to the minutes of that meeting, there was discussion on the clauses of the guidelines. As per the guidelines, commercial banks operating mobile banking services have direct agreement with agents who maintain their accounts and balance with the banks.
That means agents must have direct one-to-one agreement with banks, and banks should be wholly responsible for any activities of the agents.
The Grameenphone CEO reportedly agreed with Bangladesh Bank’s views on the non-compliance of agency agreement with the MFS guidelines.
At the same meeting, Bangladesh Bank officials expressed their concerns about the fund flow arrangement of Mobicash with banks. As per MFS guidelines, commercial banks and their subsidiaries licensed for mobile banking will have direct contracts with agents who will have their own accounts and balance in the bank’s own mobile banking platforms.
Based on these findings, the central bank later made a decision to conduct an audit to examine agency agreements with banks and the fund flow system of Mobicash with the banks. The audit found that Mobicash agents have no separate accounts with the banks.
Later, the central bank asked the CEO of GP to arrange for separate accounts of Mobicash agents with each bank.