In a ground-breaking move, the central bank yesterday allowed non-bank entities to install automated teller machines and point-of-sale terminals across the country as part of its efforts to promote card-based transactions.
The initiative will help people in the backwaters to settle transactions without going to banks as some private companies have expressed their intent to build a wider network of ATMs.
Only banks are now allowed to build ATM and POS infrastructure but they are unwilling to expand the base further given the rising cost for maintenance, manpower and security.
The central bank has worked on the issue for years and issued a detailed guideline yesterday, according to a Bangladesh Bank official.
India's central bank drew up such regulations in 2012 and let private companies set up ATMs in 2014. In many countries, banks hardly provide ATM services.
Banks in Bangladesh usually set up ATMs and POS terminals based on the number of customers in a given area, said an official of a private bank.
"Most private banks do not have an adequate number of branches in rural areas, let alone ATMs and POS terminals."
Besides, banks have to spend Tk 5-7 lakh to install an ATM and count a minimum of Tk 60,000 per month to maintain it, he said.
"So, the growth of ATMs and POS terminals has been very sluggish. The situation will change once non-bank entities start providing the services."
As per the guidelines, private companies will have to submit a three-year business plan while obtaining licences from the central bank and set up three ATM booths in rural areas against one in the cities.
They must deploy at least 100 ATMs and 1,000 POS machines per year.
Besides cash withdrawal, clients will be allowed to transfer funds from one bank to another and pay their credit card bills through the ATMs.
The entities should have Tk 45 crore in paid-up capital if they intend to offer ATM services only, while an additional bank guarantee of Tk 10 crore would be required for providing both ATM and POS services.
Each company must select a bank as a settlement lender through which the clients' transactions will be executed.
The companies will establish their own switches or use the ones of their settlement banks to connect to the local or international payment and settlement platforms.
They must run a call centre round-the-clock and an online portal to receive complaints and put in place standard dispute resolution procedures.
The non-bank entities will be allowed to display their own logos and advertisements and offer value-added services as per regulations, while banks will be able to issue co-branded cards in partnership with these entities.
The companies cannot charge a customer directly for any transaction. In case of an ATM transaction, the settlement bank's account will be credited as per the existing policies and procedures of the central bank.
Pay Union Bangladesh, a local fintech company, applied to the central bank in August last year seeking permission to set up ATMs, the BB official said.
Jasoda Jibon Debnath, managing director of the company, told The Daily Star that they would install at least 5,000 ATMs across the country.
As of January, banks have installed 10,961 ATMs and 60,474 POS terminals while they issued 15.56 lakh credit cards and 1.86 crore debit cards, according to data from the central bank.
The number of ATMs and POS terminals will increase manifold as the central bank is allowing non-bank entities to set up the infrastructure, Debnath added.
"We have started making preparations to install ATMs as the Bangladesh Bank has issued guidelines in this regard," said Osman Haidar, director (business) of IT Consultants, another fintech company that had applied the BB two years ago.