The Bangladesh Bank on Sunday decided to run a forensic audit on mobile financial service provider Nagad.
The decision was made at a board meeting of the central bank, according to BB鈥檚 spokesperson and executive director Husne Ara Shikha.
On September 17, the BB appointed a five-member management board to Nagad.
The board鈥檚 primary responsibility is to outline a future plan and develop strategic management for Nagad, which operates as digital financial service wing of the Bangladesh Post Office.
Earlier on August 21, the BB dissolved Nagad鈥檚 board of directors and appointed its director Muhommad Badiuzzaman Dider as administrator to the MFS firm to manage it.
Prior to that, Tanvir Ahmed Mishuk was serving as managing director of both Third Wave Technologies and Nagad.
The administrator has six more BB officials for helping his activities at Nagad.
Concerns over Nagad emerged when it was discovered that Third Wave Technologies, its technology partner, took a loan of Tk 500 crore from Exim Bank allegedly using Nagad鈥檚 trust fund 鈥� money held in customer accounts 鈥� as collateral.
About Tk 317 crore of this amount had been overdue, which has, however, been come down to Tk 36 crore now.
When the money was used as collateral for the loan, it created a shortage in Nagad鈥檚 account, meaning that Nagad virtually created more e-money than real money kept in its customers鈥� accounts or 鈥榯rust fund鈥�.
That activities violated MFS regulations, which require e-money to be backed equally by real money in the customer accounts.
Since its inception, Nagad has faced complications with its licensing.
According to regulations, an MFS company must be a subsidiary of a financial institution or government entity.
However, despite several time extensions, Nagad is yet to become a subsidiary of the Bangladesh Post Office or any other institution.
To comply with the rules, Nagad obtained licence for Nagad Digital Bank, under which it would operate as a subsidiary. The licence for the digital bank was suspended on August 22.