Bangladesh Bank has set up a Tk 100 crore refinance scheme titled “Digital Microfinance” for customers of Mobile Financial Service (MFS) providers.

The decision was taken at the last meeting of the central bank’s board of directors.

According to bKash, the largest MFS provider in the country had already started this business by signing an agreement with Citibank.

Loans ranging from Tk 500 to Tk 20,000 will be granted to eligible clients based on various criteria. The interest rate is 9% and the term is up to three months, he added.

According to a senior central bank official, only banks that offer mobile banking services will be able to benefit from financing from this fund. And institutions like bKash and Nagad that are not affiliated with banks will enter into an agreement with any bank.

He added that a bank would receive funds for a period of three months based on an agreement with the central bank. New funds will have to be received by repaying the previous debt after three months on the basis of the contract.

Currently, 13 companies such as bKash, Rocket, mCash and upay provide financial services through mobile banking in the country. The service of the postal department “Nagad” offers a similar service although the public institution has not been included as a mobile banking service.

In March this year, a record transaction of Tk 77,022 crore took place in the mobile banking industry. Earlier in January, customers transacted Tk 73,393 crore – by far the second highest transaction in mobile banking in a single month.

In May last year, the third highest transaction in mobile banking was Tk 71,247 crore, according to updated statistics from Bangladesh Bank.

bKash authorities said only customers who joined the MFS provider through a biometric system get a digital loan from Citibank. Only those who use the bKash app and perform various types of transactions regularly are given priority to avail the loans.

“As a result, those who became customers conventionally with national ID cards, are not getting loans now. Likewise those who are not using the app, they will not be getting loans,” they added.

The bKash authorities further stated that for those who registered in the traditional way and became customers, the bKash authorities take the initiative to re-register them through an electronic biometric system.

As a result, many more customers will be eligible for the loan. Furthermore, they have taken the initiative to allow those who have become customers of the conventional regime to benefit from the credit facility. The Bangladesh Bank has been contacted for this purpose.

As per central bank guidelines, customers can only avail loans after completing e-KYC through a biometric system.