PSD Circular Letter No. 05: Guidelines for Trust Fund management in payment and settlement services

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PSD Circular Letter No.: 05/2022
Payment Systems Department
Bangladesh Bank
Head Office
Dhaka

27 July, 2022
Date: --------------------
12 Srabon, 1429

Managing Director / Chief Executive Officer
All Scheduled Banks, Mobile Financial Services (MFS) Providers, Payment Service Providers (PSP), Payment System Operators (PSO), and Digital Financial Services Wing of Bangladesh Post Office operating in Bangladesh Head Office, Dhaka.

Dear Sir,

Subject: Regarding the management of Trust Funds in payment and settlement services.

Reference is invited to point No. 8 of the instruction issued in PSD Circular No. 06/2021 dated 06 May, 2021. According to the aforementioned instruction, MFS, PSP, and PSO providing payment services must ensure that the status of the reserved Trust Fund at the end of each day (EOD) is greater than or equal to the relevant Trustee's liability to the customer/merchant.

2. In this regard, it is mentioned that in the current payment system, customers of MFS and PSP can transfer funds (Off-Game) from their Debit/Credit Card/Bank Account to Mobile/E-Wallet. In this case, if the customer's bank (i.e., Own Bank) and the relevant MFS/PSP's Trust and Settlement Bank (i.e., Other Bank) are not the same bank, the aforementioned inter-bank (IB) transactions are generally settled on a T+1 (Next Day) basis.

Although MFS and PSP institutions issue e-money instantaneously (Jodi Jodi) for customers' mobile/E-Wallet Off-Game transactions, the relevant institution's Trust and Settlement Account generally receives the customer's funds on the next working day. Consequently, the aggregate status of the Trust and Settlement Accounts of MFS and PSP institutions tends to be lower than the status of the relevant institution's aggregate e-money.

Similarly, in the case of customer merchant payments, if the customer's bank (i.e., Own Bank) and the relevant merchant's Other PSO's Trust and Settlement Bank are not the same bank, due to the reasons mentioned above, the customer's paid funds generally get deposited into the relevant PSO's Trust and Settlement Account on the next working day. Consequently, the aggregate status of the Trust and Settlement Accounts of PSOs also tends to be lower than the aggregate liability of the relevant institution to the merchants.

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4. Considering the matters mentioned above, the following instructions are provided for the compliance of point No. 8 of PSD Circular No. 06/2021:

4.1 Due to delays in the settlement of inter-bank (IB) transactions mentioned in points 2 and 3, the Trustee's receivable funds remaining in an unsettled state in the relevant MFS/PSP/PSO's Trust and Settlement Account prior to deposit shall be considered as Trust Fund In Transit. For the purpose of compliance with the instruction in point No. 8 of PSD Circular No. 06/2021, Trust Fund In Transit shall be accounted for as part of the Trust Fund.

4.2 The aforementioned Trust Fund In Transit shall be deposited into the Trustee's Trust and Settlement Account on a T+1 basis or within the minimum time applicable for the relevant inter-bank transaction settlement.

4.3 When submitting details regarding Trust Funds to Bangladesh Bank, the status of the Trust and Settlement Account and, where applicable, the Trust Fund In Transit shall be presented separately.

Yours faithfully,

(Md. Majbaur Haque)
Director, PSD
Phone: 9530174
Email: subun.dhoya@bb.org.bd