Mobile phones to turn money remitters soon

Update: 2 September, 2008
The central bank is likely to allow transfer of cash through the use of mobile phone network within the country.

The maximum limit of each transaction will be Tk 5,000 while the rate of commission will range between Tk 10 and Tk 50 depending on the amount.

"The proposed system is not a mobile phone banking. It's a simply a mechanism to transfer money by using mobile phone network across the country," a senior official of the Bangladesh Bank (BB) told the FE Monday.

Clients will be able to send and receive the money from local bank branches, non-governmental organisations, post offices and mobile phone outlets, the official added.

He said the main objective behind the introduction of the facility is enabling a large number of small earners, who do not maintain accounts with banks to send and receive such funds without having to undergo complicated processes.

At present, around 13 per cent of the population have bank accounts while 35 per cent are now using mobile phone across the country, the official said.

The BB took the move to expedite domestic money transfer with minimum charges particularly in the country's remote areas through mobile phone networks that would simultaneously encourage the inflow of foreign remittances.

A section of the people are now using mobile phone for transferring their money illegally from urban areas to rural areas through short message service (SMS), generally known as flexiload, he alleged.

"We want to legalise such illegal money transfer using mobile phone network by introducing the new mechanism," another BB official said, adding that the central bank will finalise the draft policy, titled, the Bangladesh Mobile Payments Guidelines 2008, in line with the stakeholders' opinion.

The central bank has already sought opinion from stakeholders including banks and Bangladesh Telecommunication Regulatory Commission on using mobile phone network for money transfer by September 10.

To operate such services, the interested cell-phone companies will have to take licences either individually or in joint ventures with banks from the central bank as a 'mobile payment services provider' (MPSP), they added.

"The existing anti- money laundering rules and regulations will be followed by imposing a cap of Tk 20,000 per person each month under the proposed system," the BB official said.

Some executives of the commercial banks, however, fear that the central bank move would help the mobile phone companies to become banks.

"The proposed mechanism will create disparity between banks and mobile companies as an MPSP licence would cost Tk 350 million whereas commercial banks have to raise their paid up capital to Tk. 4.0 billion by 2011," a senior banker, who is working as the chief executive of a private commercial bank (PCB), told the FE.

"Although the function of MPSP licence holders will be limited to money transfer only, but even then the disparity in the proposed capital is far too less compared to commercial banks," another senior official of a PCB added.

"Most of the mobile operators had been penalised at some point by the authorities concerned for illegal operations," the official said raising questions on the security of the money that would be transferred by the same mobile companies.

Meanwhile, most of the commercial banks have started analysis of the proposed policy that would be finalised at a meeting of the Association of Bankers, Bangladesh (ABB) scheduled to be held on September 9.

"We will submit our opinions to the central bank on September 10 in this connection," a senior member of the ABB told the FE.

Most of the mobile operators have already showed their interest to use their network for such money transfer business.

Many countries including the Philippines, Brazil, Kenya, South Africa and Pakistan have already allowed money transfer through mobile phone.