Bangladesh Bank’s Governor Discusses Nagad Investment

Governor Ahsan H. Mansour stated that discussions with the law firm of MP Mir Ahmad bin Qassem Arman will only occur if there’s a credible foreign investor interested in Nagad.

In response to inquiries about a letter soliciting investment proposals for Nagad, the governor mentioned to Business Standard that he hadn’t received the letter formally. He pointed out that the document, which recently spread on social media, did not list any credible investors.

“Law firms should clarify who their investors are and their relevant experience,” he emphasized. He also noted that if a Bangladeshi investor wishes to participate, they cannot use the name of a foreign investor.

On February 23, Arman expressed that several international investment firms had shown interest in Nagad, and his law firm was merely facilitating arrangements. He indicated that a letter had been sent to the Governor of Bangladesh Bank, and they planned to meet soon to discuss the matter in depth.

Arman recounted that on February 8, just three days before the 13th parliamentary elections, he wrote to the central bank governor seeking permission to audit Nagad’s position ahead of possible investment. In the letter, he conveyed his aspiration to obtain a license and open a digital bank to align with global financial trends utilizing emerging technologies.

He added that his mission was to provide impactful financial services to the citizens of Bangladesh, and he was already in talks with potential foreign representatives interested in investing. During his meeting, he learned that Nagad Digital Financial Services is currently under the Bangladesh Bank’s direct oversight due to previous fraud allegations.

Nagad is expected to transfer to new ownership and management after due diligence is completed. Arman expressed readiness to move forward after discussions with international investors, which would involve a forensic audit to gain insights into the company’s financial state, including strengths and weaknesses.

A Nagad executive indicated unawareness of such a proposal, mentioning that investors usually approach the central bank directly. They added that this is not the typical route for investing in Nagad, as the government-appointed board has submitted a future roadmap to the Bangladesh Bank, recommending ownership restructuring.

According to the roadmap, two potential paths exist: a forced takeover or a negotiated settlement. The board highlighted that while a forced takeover could present legal complications, a negotiated restructuring seems feasible, considering the owners’ willingness to reach an agreement.

Concerns have been raised that a takeover could complicate efforts to attract strategic partners. Previously, in August, Governor Mansoor outlined plans for MFS privatization, stating the post office couldn’t effectively manage Nagad. He anticipated bringing in new strategic investors within three to four months.

Following the recent government changes, Bangladesh Bank appointed an administrator and six assistants to oversee the company, taking direct control of Nagad’s operations.

In the meantime, several former Nagad officials, including the previous MD and CEO, are facing legal proceedings for alleged fund misappropriation, while charges have been filed against 22 individuals, including the former chairman, for fraudulently creating electronic money without adequate reserves.

A committee was established to explore Nagad’s reorganization, and it has already submitted a report regarding ownership changes. Additionally, the Bangladesh Investment Development Board recently issued a request for expressions of interest to appoint a financial advisory firm for the sale of Nagad.

Despite these developments, there seem to be few concrete steps taken to resolve the ongoing ownership dispute with Nagad over the past year and a half.