PSD Circular No. 14: Inter-distributor Cash Management of Mobile Financial Services (MFS) Provider

Payment Systems Department Bangladesh Bank Head Office Dhaka. Website: www.bb.org.bd

Date: 04 September, 2022 20 Bhadra, 1429

PSD Circular No. - 14/2022

Managing Director/Chief Executive Officer All Mobile Financial Service Providers (MFSPs) operating in Bangladesh

Dear Sir,

Regarding the implementation of the 'Inter-distributor Cash Management' system to ensure adequate supply of cash and e-money in the Mobile Financial Service (MFS) market on weekly holidays/government holidays.

During the closure of banking services on weekly holidays/government holidays, MFS distributors face difficulties in performing e-money lifting (receiving e-money in exchange for depositing cash into a bank account) or e-money refund (withdrawing cash into a bank account by returning e-money). Consequently, if the supply of cash and e-money at MFS agent points is disrupted, there is a possibility of hindrance in providing uninterrupted services to customers.

2. To resolve the aforementioned issue, Mobile Financial Service Providers (MFSPs) may implement the inter-distributor e-money and cash transfer system by following the instructions below and adhering to the attached 'Inter-distributor Cash Management' system to ensure adequate supply of cash and e-money in the MFS market during the closure of banking services on weekly holidays/government holidays:

(a) Inter-distributor 'Cash Management' related transactions shall only be conducted during the closure of banking services on weekly holidays and government holidays;

(b) All transactions occurring in the Inter-distributor 'Cash Management' process must be conducted digitally;

(c) In the Inter-distributor 'Cash Management' process, a distributor may conduct transactions up to a maximum of 50 (Fifty) Lakh Taka per day (combined e-money lifting and cash/e-money refund);

(d) Distributors must enter into an agreement with the relevant MFSP to participate in the 'Cash Management' process (existing agreements may be amended, and there will be an opportunity to enter into new agreements if necessary). Distributors will participate in such activities freely according to their needs, and the agreement must state that there is no compulsion for any party to participate in this activity;

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(e) The Trust cum Settlement Account of the relevant MFSP shall not be used or involved at any stage of the 'Cash Management' process;

(f) All parties must exercise the utmost necessary caution regarding any type of problem (such as loss of money, theft, robbery, misappropriation of funds, etc.) related to the transportation of cash/money from the Lifting Distributor to the Refund Distributor;

(g) In receiving cash/money from the Lifting Distributor, the relevant responsibility (such as counting money correctly, exercising caution regarding counterfeit notes, etc.) shall rest with the Refund Distributor. Therefore, the Refund Distributor must take necessary precautions and participate in the 'Cash Management' process;

(h) The relevant MFSP must ensure all types of monitoring and supervision, including risk management, in operating the 'Cash Management' process; and

(i) Bangladesh Bank must be informed regarding participation in this activity.

Sincerely,

(Muhammad Badiuzzaman Dider) Director (PSD) Phone: 02-9530611 E-mail: badiuzzaman.dider@bb.org.bd

Enclosure: "Cash Management" System.

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Inter-distributor 'Cash Management' System

(1) Two types of distributors will be involved in the 'Cash Management' system: (a) Lifting Distributor (who has cash/money, lacks the required amount of e-money, and wishes to receive e-money in exchange for cash) and (b) Refund Distributor (who has e-money, lacks the sufficient amount of cash/money, and wishes to receive cash in exchange for e-money).

(2) All distributor-to-distributor transactions in the Inter-distributor 'Cash Management' system must be conducted digitally through the relevant Mobile Financial Service Provider's web portal/distributor application.

(3) Based on specific business addresses, distributors will be mapped by area, and this activity will be conducted among distributors in nearby areas through area-based distributor mapping. In distributor mapping, it must be ensured that all activities related to the Inter-distributor Cash Management system are completed within a maximum of 3 hours or 180 minutes.

(4) After logging into the relevant Mobile Financial Service Provider's web portal/distributor application using their own ID and password, the Lifting Distributor can submit a Requisition for e-money lifting according to their own needs.

(5) After logging into the relevant Mobile Financial Service Provider's web portal/distributor application using their own ID and password, the Refund Distributor on the opposite side can view the e-money Requisitions submitted by distributors located in their nearby area and can Accept the Requisition that matches their own needs (the Refund Distributor's need for cash).

(6) After the Refund Distributor Accepts the Lifting Distributor's Requisition, there will be an opportunity to supply the requested amount or partial amount of e-money. In the case of supplying a partial amount of e-money, the Refund Distributor will have the opportunity to supply the remaining part of the request through another distributor.

(7) When the Refund Distributor Accepts the Lifting Distributor's Requisition, the relevant Mobile Financial Service Provider must immediately block the equivalent amount of e-money in the Refund Distributor's wallet and immediately inform the relevant Lifting Distributor that the Refund Distributor has Accepted the Requisition.

(8) From the time the Refund Distributor Accepts the Requisition, the Lifting Distributor must hand over the cash to the Refund Distributor within the next maximum of 3 hours or 180 minutes.

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(9) The Lifting Distributor will hand over the cash to the Refund Distributor, and the Refund Distributor will receive the cash and provide a Money Receipt (prepared according to a specific template) to the Lifting Distributor.

(10) In the next step, through the relevant Mobile Financial Service Provider's web portal/distributor application, the Lifting Distributor must confirm the handover of cash to the Refund Distributor (along with the Money Receipt collected from the Refund Distributor) and the Refund Distributor must confirm (Confirmation) receiving the cash from the Lifting Distributor.

(11) Upon confirmation of the handover of funds from both distributors, the relevant Mobile Financial Service Provider must immediately take steps to transfer the e-money previously blocked in the Refund Distributor's wallet to the Lifting Distributor's wallet.

(12) The e-money transfer process must be conducted through the 'Internal Wallet' operated by the relevant Mobile Financial Service Provider for the purpose of Inter-distributor 'Cash Management'. That is, e-money will first be transferred from the Refund Distributor's wallet to the 'Internal Wallet', and subsequently, e-money will be transferred from the 'Internal Wallet' to the Lifting Distributor's wallet.

(13) The Requisition submitted by the Lifting Distributor on specific weekly holidays/government holidays during the closure of banking services will remain valid until 12:00 AM of that specific day. On the following weekly holiday/government holiday, the Lifting Distributor must submit a new Requisition.

(14) If any dispute arises at any stage of the aforementioned Inter-distributor 'Cash Management' system, the relevant Mobile Financial Service Provider will take measures to resolve the said dispute based on appropriate documentary evidence.

(15) Information regarding such transactions must be provided to Bangladesh Bank on a monthly basis in the prescribed format;

(16) Bangladesh Bank reserves the right to amend/add/cancel this process at any time.

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