Bangladesh Bank (BB) has banned the mobile financial service of Prime Bank with immediate effect as it found gross irregularities into the service.
“The bank will no more be able to continue its mobile financial service as the central bank has canceled licence after digging out its fraudulence in the name of the service,” a senior executive of Bangladesh Bank said yesterday.
The central bank earlier issued a show-cause notice to the managing director of Prime Bank after detecting huge anomalies in recruiting manpower for the service – Easy Cash.
“But the bank failed to give satisfactory answer, prompting BB to cancel the licence of its mobile financial service,” said another executive.
The BB has also asked stopping mobile financial service-related advertisement “Mobicash” of Grameenphone (GP), as the mobile operator was giving the service violating the agent banking guideline.
Five banks, including Islami Bank Bangladesh and Dutch-Bangla Bank, have agreement with GP for Mobicash service.
This is for the first time the central bank has canceled licence for mobile phone banking of a private commercial bank and an advertisement after introducing mobile banking in the country.
According to the BB inspection report, SMG Infocom as appointed by the Prime Bank to operate its mobile banking Easy Cash received Tk25 crore as undertaking money from 2,500 jobseekers using the Prime Bank’s logo.
SMG Infocom had shut down its operation immediately after the recruitment, but it had not refunded the undertaking money to the appointed ones as the solution provider had assured the jobseekers they would refund the undertaking money after recruitment.
A BB official said SMG Infocom had received between Tk50,000 and Tk2.5 lakh from each person as undertaking money.
Detective Branch of Police also informed Prime Bank about the SMG Infocom’s fraudulent act, said a BB letter sent to the bank. Prime Bank could prevent the fraudulent act if it had taken immediate measures by taking help from the central bank and law enforcement agencies, the letter observed.
On April 7 this year, the BB issued a show-cause notice to Prime Bank to explain in five working days why the central bank would not cancel no-objection certificate it provided the private commercial bank to run mobile financial services for misappropriating a huge amount of money.
In reply to the show-cause notice, Prime Bank denied involvement with the fraudulent act. Prime Bank Managing Director Md Ehsan Khasru could not be reached for comment.
About Mobicash, BB found that agents of Mobicash opened accounts of mobile financial services on behalf of the banks violating the central bank’s agent banking guideline.
According to the central bank approval, Mobicash was providing three types of services – ticket purchasing for cricket match, ticket buying for train and payment of utility bills on behalf of the clients.
The central bank earlier faced huge criticism from various corners about the mobile financial services as it approved bKash, a subsidiary company of BRAC Bank, to operate mobile banking.
Mobile financial services got momentum in the country after BB had brought amendment to the guidelines on the service for the commercial banks in December, 2011.