Mobile financial services
Agents under BB scanner
Sector beset with malpractices, finds central bank
JAGARAN CHAKMA
Agents of mobile financial services (MFS) are themselves actively involved in various kinds of criminal activities, including collection of ransom by human trafficking, extortion, and fraud by maintenance of several hundred false or real accounts, according to a report titled Impact of Mobile Banking on Financial Inclusion in Bangladesh, released by the Bangladesh Bank (BB) recently.
It is very easy to open an MFS account with a fake identity, the report said, adding that money laundering is mostly conducted through mobile accounts registered with fake identities.Over the-counter (OTC) transactions have become a widely practiced irregularity in the MFS sector in Bangladesh, which is a serious problem, and is considered the root of many evils in this sector. This also causes agents to charge customers illegally, the report said. About competition and market share, the BB said bKash currently dominates the MFS space, accounting for 55.11 per cent of the market followed by DBBL (38.26 per cent). The rest of the 11 providers with live services currently account for around 6.63 per cent of the total market share.
According to the BBs reports, at the beginning of 2013, the total number of agents was 60,000. At the end of September 2015, this figure crossed 542,400. This large differential highlights the rapid growth of this space in a very short time. In terms of agent numbers, bKash is the market leader, followed by DBBL. It is seen that only 2 per cent of
agents are female while 49 per cent of the agents work in the rural areas.
The BB found that 71 per cent of the MFS users have access to an agent within 1 km. In contrast, only 19 per cent of bank account holders have a bank branch within the same distance. Most of the ATMs are available within 2 to 10 km. Maximum MFIs are reachable within 1 to 5 km. To access a post office, a user has to travel more compared to other access points of financial services.
The BB suggested that banks should also ensure that fraudulent transactions are isolated for subsequent investigations and develop an IT-based automated system to identify suspicious transaction reports before the services are introduced, and also immediately report to the anti-money laundering department of BB any suspicious, unusual or doubtful transaction likely to be related to money laundering or terrorist financing.
It further said in order to increase the active customer rate, MFS providers can consider building up a partnership with micro-financing institutes (MFIs), wherein banks can leverage the outreach of MFIs.
When contacted over the matter, bKash spokesperson Zahedul Islam yesterday told The Independent that the company cannot immediately comment on the issue.
Regarding MFS operators, the BB said a total of 28 banks have already received MFS licences, but only 20 have started operations. Among them, just two are expanding services, though 13 providers seem to increase their contributions. It requires big investment to set up an MFS proposition, it noted.
It also said some banks that have received permission from the BB are still undecided as to whether they would launch their services because of the cost factor.
The BBs financial stability report showed that during January to September 2015, a total of Tk. 1,136.92 billion was transacted, while it was Tk. 1,031.55 billion in 2014, Tk. 517.83 billion in 2013, and Tk. 71.23 billion in 2012.
