Prime Bank asked to stop mobile banking service

Bangladesh Bank (BB) has cancelled the mobile banking service license of Prime Bank after finding massive irregularities and mismanagement in running the service, official sources said.
The Payment System Department (PSD) of BB on Wednesday issued an order in this regard asking the authorities of the bank to immediately stop the service.
Prime Bank Ltd (PBL), one of the country’s leading private commercial banks, was offering various financial services to its clients under the name of ‘Easy Cash’ through its authorized outlets across the country.
The service includes, opening of mobile bank account, cash deposit, cash withdrawal, payment of utility bills, fund transfer, merchant payment, inward foreign remittance disbursement, balance inquiry, mini statement and salary disbursement.
Confirming the matter, BB spokesperson Mahfuzur Rahman told The New Nation yesterday that the central bank on the day scrapped the mobile banking service (MBS) license of Prime Bank in exercise of Banking Company Act.
“PBL has resorted huge irregularities while offering the service for which BB took the harsh decision against the bank,” he added.
He further said that earlier a central bank team while conducting an inspection found that Prime Bank was involved in the anomalies in running the service.
“A letter in this regard has been sent to the PBL’s managing director asking him to act with the BB’s directive,” Mahfuz said.
Prior to canceling the license, the central bank issued show-cause notice to the managing director of Prime Bank as an investigation of BB had detected huge anomalies in recruiting manpower for the bank’s Easy Cash operation.
The central bank’s show-cause letter said, Prime Bank had appointed a solution provider named SMG Infocom Ltd to operate its MBS and SMG Infocom recruited around 2,500 people to operate the service.
The solution provider took huge amount of money from them as undertaking, using tricks, it said.
The BB investigation found that the SMG Infocom had received between Tk 50,000 and Tk 2,50,000 from each job seeking candidates as undertaking money. “SMG Infocom closed its operation immediately after the recruitment leaving 2,500 jobless but it had not refunded the undertaking-money to the appointed persons”, added the investigation report.
SMG Infocom had published media advertisements on the recruitment, using the Prime Bank’s logo.
As the Bank had appointed the SMG Infocom to provide it MBS, so, it is responsible for the irregularities committed by SMG Infocom, it said. According to the BB report, the audited financial statement of SMG Infocom prepared on June 30, 2013 showed that the outstanding of the undertaking money stood at Tk 15.78 crore.
The BB report, however, said the actual undertaking money of the successful candidates for the job might be around Tk 25 crore.
Earlier on March 30, the BB issued a letter asking Prime Bank to refund the undertaking money to the appointed people, but did not follow the BB directive.
“The authorities of PBL recently answered the showcase notice. The explanation submitted by the bank was not satisfactory,” a BB official said.
Prime Bank managing director Md Ehsan Khasru could not be reached for his comment on the matter over mobile phone despite several attempts.
Meanwhile, the central bank has decided to stop ‘Mobi Cash Service’ of Grameen Phone (GP) under which the mobile phone operator has been offering services like opening of mobile bank account, cash deposit, cash withdrawal, payment of utility bills and flexi load to its subscribers.
“GP has been offering the service violating the rules and regulations of the central bank. As the mobile operator is engaged in an illegal service, BB has decided to stop it,” said another BB high official.
BB is going to send letters soon to the authorities of GP in this regard, asking it to stop the unauthorized service.