Regulatory Framework for MFS in Bangladesh
Statutory Interoperability Standards
Under the National Payment Switch Bangladesh (NPSB) framework, MFS Providers (MFSPs) are mandated to ensure technical and operational interoperability. This allows seamless fund transfers between different MFSPs and scheduled banks, as per PSD Circular No. 04/2020.
| Compliance Pillar | Statutory Reference | Regulatory Requirement |
|---|---|---|
| Licensing | Section 4, Payment Systems Act 2024 | Mandatory NOC from Bangladesh Bank for MFS operations. |
| Trust Fund Protection | Regulation 6.2, MFS Regulations 2022 | Maintenance of Trust Cum Settlement Account (TCSA) with scheduled banks. |
| Interoperability | PSD Circular 04/2020 | Mandatory integration with the Binimoy (IDTP) platform. |
| Audit Compliance | Section 21, Payment Systems Act 2024 | Annual external audit of TCSA and IT infrastructure. |
Trust Fund Audits and Fiduciary Obligations
MFSPs hold customer funds in a fiduciary capacity. According to Regulation 7 of the MFS Regulations 2022, the TCSA must be audited by a Bangladesh Bank-empanelled chartered accounting firm. The audit focuses on ensuring that the aggregate balance in the TCSA is never less than the total outstanding e-money issued to customers and agents.
- Quarterly Reconciliation: MFSPs must reconcile TCSA balances with the e-money ledger at the end of every business day.
- Anti-Money Laundering (AML): Compliance with the Money Laundering Prevention Act, 2012 and Anti-Terrorism Act, 2009 is mandatory for all MFS transactions.
- Data Privacy: Protection of customer financial data under the Cyber Security Act, 2023.
Consult Barrister Liton Asaduzzaman Sarkar
For specialized legal counsel on MFS licensing, TCSA structuring, and regulatory disputes.
Schedule a ConsultationFrequently Asked Questions
What is the minimum capital requirement for an MFS Provider?
As per Regulation 4.1 of the MFS Regulations 2022, the minimum paid-up capital for a subsidiary MFS provider is BDT 450 million, which must be maintained at all times.
Are MFS providers allowed to invest the funds held in the Trust Account?
Under Regulation 6.4 of the MFS Regulations 2022, a portion of the TCSA balance may be invested in Government Securities (Treasury Bills/Bonds) subject to prior approval from the Payment Systems Department (PSD) of Bangladesh Bank.
What are the penalties for non-compliance with interoperability directives?
Non-compliance attracts administrative fines and license suspension under Section 31 and 32 of the Payment Systems Act 2024.
◆ Related Statutory Guides & Practice Insights
<li style="margin-bottom:12px; line-height:1.5;">
<a href="/en/dividend-repatriation-fera-1947-bangladesh/" style="color:#C5A059; font-weight:600; text-decoration:none; font-size:14px; display:inline-block; transition:color 0.2s;">• Dividend Repatriation under FERA 1947: Bank Due Diligence Guide</a>
</li>
<li style="margin-bottom:12px; line-height:1.5;">
<a href="/en/psp-pso-licensing-bangladesh-bank/" style="color:#C5A059; font-weight:600; text-decoration:none; font-size:14px; display:inline-block; transition:color 0.2s;">• PSP and PSO Licensing Framework under Bangladesh Bank Regulations</a>
</li>
<li style="margin-bottom:12px; line-height:1.5;">
<a href="/en/aml-cft-bfiu-reporting-fintech-compliance/" style="color:#C5A059; font-weight:600; text-decoration:none; font-size:14px; display:inline-block; transition:color 0.2s;">• AML/CFT Directives: BFIU Reporting and FinTech Compliance Guide</a>
</li>
<li style="margin-bottom:12px; line-height:1.5;">
<a href="/en/syndicated-loan-security-trustee-bangladesh/" style="color:#C5A059; font-weight:600; text-decoration:none; font-size:14px; display:inline-block; transition:color 0.2s;">• Syndicated Loan Agreements & Security Trustee Structuring in BD</a>
</li>