A bKash advertisement is seen at a mobile phone outlet in Dhaka on Sunday. — New Age photo

bKash holds 4 lakh accounts in violation of BB rules and US company Money in Motion, has not received any no-objection certificate from the Bangladesh Bank for operating the mobile banking business, said the central bank officials.
Besides, although a subsidiary of a bank is not allowed to hold customer accounts even if it has obtained mobile banking licence, bKash holds accounts and funds of around four lakh customers illegally, they alleged.
A BB official told New Age that a bank or a subsidiary company had to obtain an NOC from the central bank to operate the mobile banking in accordance with Mobile Financial Service guideline of BB.
But bKash received only a licene for Payment Service Operator from the central bank.
The PSOs are only allowed to provide clearing and settlement facility to the banks and other financial institutions and they are not authorised to open customer accounts and hold their funds, he said.
VISA, MasterCard, Q-cash and Omnibus are PSOs but none of these companies is authorised to hold customers’ accounts and funds, he said.
But bKash is providing services like cash in, cash out, deposit, utility bill payment, salary and inward foreign remittance disbursement to its clients through mobile banking.
In Bangladesh Payment and Settlement Systems regulations 2009 of the BB, PSO is clearly defined as ‘Payment System Operator which refers to an entity licensed by the Bangladesh Bank for operating a settlement system for payment activities between participants of which the principle participant must be a schedule bank or financial institution maintaining accounts with the Bangladesh Bank for meeting Cash Reserve Requirement.’
But bKash now holds around four lakh customers’ accounts and their funds which is unlawful under both the PSO and MFS guidelines of the BB, he explained.
Section 6 of the BB MFS guideline said, ‘Customer  account,  termed  “Mobile  Account”  will  rest  with  the  bank  and  will  be  accessible  through customers’ mobile device.’
The official said that bKash had broken the BB rules as a subsidiary company was not authorised to hold the customer accounts.
Under the circumstances, the customers’ fund may fall into a risk in future.
Source in BB said the central bank on December 23, 2009 had permitted the BRAC Bank to form a subsidiary company to operate as PSO.
After getting the permission, BRAC Bank formed bKash and the central bank provided the PSO licence to the subsidiary company on April 12, 2010.
bKash is working both as an extension of BRAC Bank and as a full-scale mobile phone-based payment switch, according to bKash  website.
Another BB official said BRAC Bank owned 51 per cent share of the bKash while the rest was owned by US-based Money in Motion.   
He said, ‘Banks and financial institutions can open customer accounts and hold customer funds. In order to secure that fund, they are required to keep cash reserve requirement and statutory liquidity ratio with the BB and ensure deposit through deposit insurance scheme. But bKash has not taken such measures.’
Syed Mahbubur Rahman, managing director and chief executive officer of BRAC Bank, told New Age that the bank had completed all official formalities for operating mobile banking through bKash.
He claimed that the central bank was regularly monitoring bKash activities and mobile banking was possible to operate under the existing PSO licence. 
When his attention was drawn to the customers’ accounts holding by bKash, he said if there was any fault in the bKash or the BB activities that could be corrected.
Dasgupta Asim Kumar, executive director of the BB, however said that mobile banking in general contributed a great deal to ensure financial inclusion of people which is a policy of the central bank.
He observed that bKash was so far operating its services quite efficiently. ‘What we need to see is if any activities of bKash caused any problem for its customers. It should not be made a victim through any legal loopholes.’