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The Bangladesh Bank has recommended immediate revoking of the interim approval for the scam-hit mobile financial service (MFS)-provider Nagad and its restructuring as a subsidiary of a state-owned bank for the time being.
If restructured, Bangladesh Bank and the designated state-run bank could jointly manage Nagad temporarily before handing it over to a strategic investor -- paving the way for large-scale investment and sustainable operations.
In a letter to Finance Adviser Dr Salehuddin Ahmed, BB Governor Dr Ahsan H Mansur highlighted the urgent need for action in light of allegations involving fund misappropriation and governance failures at Nagad.
"It seems appropriate to cancel the interim approval of Nagad immediately," he said.
However, if the government opts to continue its operations, the governor noted, the Financial Institutions Division (FID) under the finance ministry may restructure Nagad as a state-owned bank subsidiary.
Mr Mansur also assured that the central bank and the chosen state-owned bank could operate Nagad temporarily before transitioning it to a strategic investor in the near future, enabling the institution to rebuild through substantial capital injection.
Separately, Special Assistant to the Chief Adviser Faiz Ahmad Taiyeb sent a demi-official letter recommending the appointment of a chief executive officer and a complete overhaul of the board of directors.
At a high-level meeting on May 18, attended by the finance adviser, BB governor, attorney general, and others, the appointment of central bank director Motasem Billah as Nagad's CEO was discussed.
To formalise the restructuring, the Financial Institutions Division was tasked with preparing a summary for the finance adviser's approval.
The summary includes several key recommendations: registering Nagad as a company with the Registrar of Joint Stock Companies and Firms (RJSC); forming a new company under the Posts and Telecommunications Division within three months; drafting a Memorandum and Articles of Association; forming a new board of directors; and arranging the transfer of assets and liabilities to the registered entity.
Nagad was launched by the Postal Department in March 2019 without prior approval from the central bank.
Under political pressure, the BB granted interim approval in March 2020, intended to last six months.
That approval has since been extended nine times, most recently in April 2025, and is currently valid through December 2025.
Irregularities, lawsuits, embezzlement
After political unrest in August 2024, several top officials of Nagad fled the country.
On August 21, 2024, the Bangladesh Bank appointed an administrative team to restore order.
A BB investigation report submitted on November 18, 2024 revealed that Nagad had issued Tk6.45 billion in excess e-money without real cash backing, and Tk17.11 billion in government allowances had been withdrawn via 41 unauthorised distributors.
The findings led to a criminal case filed at Motijheel Police Station on February 3.
A director of Nagad challenged the central bank's administrator appointment in the High Court, which upheld BB's decision.
However, the Appellate Division granted an eight-week stay on May 7, 2025, stalling the administrator's work since May 12.
Amid this legal vacuum, sources claim that former managing director Tanvir Ahmed Mishuk - an accused in the BB case - unilaterally appointed another accused, Shafayet Alam, as CEO via email, bypassing the board.
BB alleged that both individuals continue to oversee critical finance and IT operations at Nagad, where illegal money transfers and other irregularities persist.
The BB governor, in his letter, noted that due to the stay order and lack of administrative control, the central bank cannot be held responsible for Nagad's activities after May 12.
Declining trust, ACC probes
The central bank expressed concern that ministries, particularly the Ministry of Social Welfare, may now be reluctant to distribute social allowances via Nagad, citing previous instances of embezzlement.
As government disbursements constitute a major revenue stream for Nagad, any such shift could severely affect its viability.
The BB also pointed out that the Postal Department lacks the technical and operational capacity to manage a mobile financial service.
According to the Mobile Financial Services Regulation 2018, only scheduled banks are permitted to operate MFS entities through subsidiaries - making Nagad's original setup a regulatory violation.
In a further blow, the Anti-Corruption Commission (ACC) has filed a case against Tanvir Ahmed Mishuk and nine others for allegedly embezzling Tk6.45 billion.
On May 30, a Bengali daily published a report citing "anonymous insiders," alleging that Atique Murshed - a personal aide at the Ministry of Post and ICT - embezzled Tk1.5 billion from Nagad and used his influence to secure top positions for several relatives, including his wife.
Murshed had previously served as personal assistant to National Citizen Party (NCP) chief Nahid Islam during his tenure as adviser for posts, telecommunications, and ICT.
On June 1, ACC Director General (Prevention) Akhter Hossain told reporters that preliminary evidence had been found of corruption and irregular recruitment practices at Nagad. Mr Murshed has since denied the allegations.
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