What are the exact regulatory steps and timelines to obtain a license for a mobile financial service in Bangladesh?

Hello and Respect,

I have reviewed your query regarding the launch of a mobile wallet and payment application in Bangladesh. Given the strict oversight by Bangladesh Bank (BB), choosing the correct license category is critical before you proceed, as the regulatory pathways for a \"Mobile Financial Service\" (MFS) and a \"Payment Service Provider\" (PSP) are distinct.

Based on the Bangladesh Mobile Financial Services (MFS) Regulations, 2022 and the Payment and Settlement Systems Act, 2024, here is the regulatory framework you must navigate:

1. License Category Selection
You must determine if you qualify for an MFS or a PSP license, as they have different ownership structures:

MFS License (Bank-Led Model): If you intend to offer \"Cash-in/Cash-out\" services via an agent network (like bKash or Rocket), you must form a subsidiary where a scheduled commercial bank holds at least 51% of the equity. The minimum paid-up capital required is BDT 450 million (45 Crore).​

PSP License (E-Wallet Model): If you are an independent fintech launching a digital wallet (e-money) without a bank parent, you should apply for a Payment Service Provider (PSP) license. This allows you to issue e-wallets and process payments. The minimum paid-up capital is BDT 200 million (20 Crore).​

2. The Two-Phase Application Process
Regardless of the category, the licensing process with the Payment Systems Department (PSD) of Bangladesh Bank typically follows two phases:​

Phase 1 (NOC): You submit your business plan, feasibility study, and IT architecture. If approved, you receive a No Objection Certificate (NOC) to set up your infrastructure. This NOC is valid for one year.

Phase 2 (Final License): After establishing your IT infrastructure and local data centers (Data Localization is mandatory), BB will conduct an on-site inspection. If compliant, the final license to commence business is issued.

3. Critical Compliance Obligations
AML/KYC: You must comply with the Bangladesh Financial Intelligence Unit (BFIU) guidelines. This includes implementing Electronic KYC (e-KYC) with biometric verification against the National Election Commission database and filing Suspicious Transaction Reports (STR).​

Settlement & Trust Fund: For PSPs, you are required to maintain client funds in a dedicated Trust Fund account with a scheduled bank, ensuring customer balances are never used for company operational expenses.​

Consultation Offer:
Navigating the \"Fit and Proper\" test for directors and drafting the compliant Business Plan (including the 3-year financial projection) requires precision.

Although I am currently based abroad, I specialize in providing detailed, text-based regulatory consultancy for fintech startups. I can guide you through the documentation, capital structuring, and application drafting remotely.

Licensing Categories:
To launch a mobile wallet and payment app under Bangladesh Bank oversight, you will typically require approval as a Payment Service Provider (PSP) for customer-facing services such as mobile wallets, merchant payments, QR transactions, and digital onboarding, or as a Payment System Operator (PSO) if you intend to run switching, routing, clearing, settlement, or shared payment infrastructure. Certain business models may require both licences.

Processing Time:
The approval timeline generally ranges from 3 to 6 months or more, depending on how complete your technical, financial, and compliance documentation is, the complexity of your proposed model, and Bangladesh Bank’s due-diligence and inspection process.

AML/KYC, Capital & Reporting Obligations:
You must comply with stringent AML/KYC requirements under the Money Laundering Prevention Act and BFIU guidelines, including customer due diligence, e-KYC integration, continuous transaction monitoring, STR/CTR reporting, sanctions screening, data retention standards, and appointment of a dedicated compliance officer. Bangladesh Bank also requires sufficient capital adequacy, minimum paid-up capital appropriate to the licence category, strong governance, audited accounts, and maintenance of a secure escrow/settlement account for customer funds. Ongoing reporting duties include periodic regulatory returns, transaction-level reporting, cybersecurity compliance confirmations, IT and penetration-testing audits, and mandatory incident notifications under the ICT Security Guidelines.

If you wish, our chamber can prepare a tailored licensing roadmap, documentation checklist, and full regulatory support—please feel free to contact us with your intended business model.

Launching a mobile wallet in Bangladesh requires navigating a Bank-Led or FinTech-Led regulatory framework. Under the Payment and Settlement Systems Act, 2024 and the Bangladesh Mobile Financial Services (MFS) Regulations, 2022, the licensing process is strictly overseen by the Payment Systems Department (PSD) of Bangladesh Bank.

1. License Categories: MFS vs. PSP
The first step is identifying whether you want to operate as an MFS or a PSP. The choice dictates your ownership structure and capital requirements.

The regulatory framework distinguishes two license types: MFS (Mobile Financial Services) and PSP (Payment Service Provider). MFS is typically bank-led via a subsidiary, while PSP is an independent fintech.

- Model: MFS = Bank-Led Subsidiary; PSP = Independent FinTech
- Primary Function: MFS = Cash-in/out via agents, P2P, salary/gov payments; PSP = E-wallets, merchant payments, QR codes
- Equity Rule: MFS: A bank must hold at least 51% equity; PSP: Can be 100% owned by non-bank entities.
- Paid-up Capital: MFS: BDT 45 Crore (plus capital reserve); PSP: BDT 20 Crore.

2. The Two-Phase Licensing Process
The regulatory pathway is divided into two distinct stages:
Phase 1: No Objection Certificate (NOC)
- Action: Submit a detailed application, feasibility study, business plan, and IT architecture.
- Timeline: Usually 3 to 6 months for review.
- Outcome: If approved, you receive an NOC to set up your technical infrastructure. This is valid for one year.

Phase 2: Final License to Operate
- Action: After building your system and hosting it in a local data center (Data Localization is mandatory), apply for the commencement of business.
- Inspection: Bangladesh Bank conducts a rigorous onsite IT audit and security inspection.
- Outcome: Issuance of the final license.

3. Core Compliance Obligations
AML/KYC & BFIU Requirements
As a reporting organization, you must comply with BFIU Circular No. 25 and the Money Laundering Prevention Act:
- e-KYC Integration: Mandatory real-time biometric or NID verification against the National Election Commission database.
- Reporting: Real-time transaction monitoring and filing of Suspicious Transaction Reports (STR) and Cash Transaction Reports (CTR) to BFIU.
- AML Officer: Appointment of a Chief Anti-Money Laundering Compliance Officer (CAMLCO).

Capital and Trust Fund Management
- Capital Reserve: MFS providers must build a capital reserve from retained earnings (10% of annual after-tax profit) until it matches the paid-up capital.
- Trust Cum Settlement Account (TCSA): 100% of customer funds must be held in a dedicated TCSA with a scheduled commercial bank. These funds cannot be used for the company's operational costs.

Ongoing Reporting
- Daily/Monthly Returns: Transaction volume, value, and active user reporting to BB.
- Security Audits: Periodic VAPT (Vulnerability Assessment and Penetration Testing) and external IT audits are mandatory.

Strategic Advice from Equity Law House
The most critical challenge for new entrants is the Bank-Led requirement for MFS. If you are a standalone tech company, you must either:
1) Partner with a scheduled bank to form a subsidiary.
2) Apply as a PSP (Payment Service Provider), which allows for an independent wallet but limits your ability to use a physical agent network for cash-out services.