Nagad service makes competition uneven
Bangladesh Post Office's digital financial service platform Nagad has sent shockwaves through the mobile financial service (MFS) sector, which, till date, had been dominated by private sector players. The disproportionately higher transaction limits under Nagad will, operators believe, create a monopoly by the state. For instance, the daily transaction limit under Nagad is Tk 2,50,000 whereas it is Tk 15,000 for other operators. Similarly, the monthly limit for Nagad customers is a hefty Tk 5,00,000 while for private operators it ranges from Tk 25,000 to Tk 1,00,000.
Furthermore, the service provided by Nagad does not fall under the central bank's scrutiny because it is regulated by Bangladesh Postal Act Amendment 2010 and will not be governed by MFS regulations. Now, the bigger question here is, given the high transaction limit, what is there to stop the Nagad service from being misused to finance terrorist activities or to launder money? There are no stringent checks and balances or regulatory framework governing Nagad. This should be of serious concern for policymakers.
Setting such high limits for this service will surely drive existing MFS players out of business because customers will inevitably switch to the service that allows them to transact in such large denominations of money on a daily or monthly basis. The explanation given by the post office that Nagad is merely a digitalised version of money order is not enough. It is imperative that there is a level playing field for all operators in the market and they must all conform to the same regulatory policies. We are all for healthy competition but the proposed Nagad platform, in its current manifestation, is anything but healthy.
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