bKash has hit a snag in its effort to become a digital bank as the Bangladesh Bank Officers Welfare Council is firmly against the move, which they have termed as being both “hasty and undemocratic.”
Besides, granting the country’s leading mobile financial service amid the formation of a new government would constitute a serious breach of administrative norms, they said.
Additionally, the central bank officials hinted that approval should be withheld due to a conflict of interest involving their governor.
Council leaders made these remarks at a press conference at Bangladesh Bank headquarters on Monday. The association had written to Bangladesh Bank a day earlier, seeking to postpone a central bank board meeting, where they would consider granting the license.
Although, Bangladesh Bank ignored this request, the meeting did not reach a conclusion on whether to provide the required approval.
Sources said the board was briefed on the issue and that bKash Digital Bank PLC has been placed as second on the proposed approval list.
Council president AKM Masum Billah and General Secretary Golam Mostafa Srabon were among those present.
Central bank officials said the ownership structure and shareholding requirement must be thoroughly reviewed in line with the Bank Company Act and other relevant regulations.
They also stressed for caution in taking major policy decisions during the ongoing political transition.
In their letter to Bangladesh Bank, council leaders said this initiative may also heighten risks in the overall banking sector.
Furthermore, it said the incoming government may have its own economic plans and reform agenda, so any rushed move to 3 issue digital bank licences would be impulsive and undemocratic.
The council further told the governor that he had previously served as chairman of a bank belonging to the group now being considered for a digital bank licence. Under the Bank Company Act 1991 and internationally recognised corporate governance principles, his participation in the decision-making process would constitute a direct conflict of interest. Any attempt to extend undue advantage to a former workplace or related group would call into question the central bank’s neutrality, the letter said.
Notably, Governor Ahsan H Mansur previously served as chairman of BRAC Bank, which holds ownership stakes in mobile financial service provider bKash. Both BRAC Bank and bKash are investing in the proposed bKash Digital Bank.
Questioning the necessity of issuing fresh digital bank licences, the council said many existing banks are already struggling with liquidity stress and mounting non-performing loans, and that granting new licences could further increase sectoral risks.
The letter also warned that any attempt to legitimise loans or irregularities of a particular group through changes in laws or regulations would tarnish the autonomy of the central bank.
In this context, the council placed three demands: suspension of the board process and digital bank licensing move; verification of the rationale for issuing licences through neutral evaluation in line with policy guidelines; and recusal from approving files involving any group where personal linkage exists.
The organisation warned it would announce tougher programmes if its demands are not met.
