Bangladesh Bank has called for the immediate cancellation of the interim approval granted to mobile financial service provider Nagad, citing serious allegations of fund misappropriation and governance failures.

In a letter to Finance Adviser Dr Salehuddin Ahmed, BB Governor Dr Ahsan H Mansur recommended that the company be restructured as a subsidiary of a state-owned bank. This would allow the central bank and the designated bank to jointly oversee operations temporarily before transitioning to a strategic investor.

“It seems appropriate to cancel the interim approval of Nagad immediately,” the governor stated. The central bank’s proposal aims to ensure stability through capital injection and regulatory oversight.

The recommendation follows findings from a central bank investigation, which revealed that Nagad had issued Tk6.45 billion in excess electronic money without cash reserves, and Tk17.11 billion in government allowances were withdrawn via unauthorised agents.

Nagad, launched by the Postal Department in March 2019, received temporary approval from the central bank a year later under political pressure. That approval has since been extended nine times and is currently set to expire in December 2025.

A high-level meeting on 18 May discussed appointing BB director Motasem Billah as Nagad’s CEO. A demi-official letter from Special Assistant to the Chief Adviser Faiz Ahmad Taiyeb also called for a board overhaul.

The Financial Institutions Division has been tasked with preparing a restructuring plan, which includes registering the firm with the Registrar of Joint Stock Companies, forming a new entity under the Posts and Telecommunications Division, and transferring assets and liabilities.