The Bangladesh Bank has issued a show-cause notice to payment system operator Information Technology Consultants Limited (ITCL) over the disruption of card, ATM, POS, and other digital payment services at more than 30 banks using its Q-Cash network.
The central bank has also sought an explanation from the company on why financial penalties should not be imposed for the disruption. The notice was sent on Thursday after the central bank found preliminary evidence of legal violations by ITCL.
Bangladesh Bank spokesperson and Executive Director Arif Hossain Khan told The Business Standard that the company had been asked to explain its actions.
“Appropriate action will be taken after reviewing its explanation,” he said.
A central bank executive said they could take action against ITCL under the law because the company had attempted to migrate its system without prior approval from the regulator. He said the Payment System Supervision Department (PSSD) identified the violation.
Kazi Saifuddin Munir, managing director and CEO of ITCL, could not be reached for comment despite several phone calls and messages.
Q-Cash services were initially scheduled to remain suspended from 4 October to 10 October. Although services resumed at 10pm on 6 October, transactions remained disrupted for more than 48 hours at over 30 banks relying on the network.
Affected services included bank cards, ATMs, POS, interbank fund transfers, e-commerce, Bangla QR, and cash-in and cash-out facilities through mobile financial services.
The disruption left customers struggling to withdraw cash and conduct urgent transactions. Services through the Q-Cash network have since returned to normal.
Software vendor dispute triggered disruption
The disruption stemmed from a financial dispute between ITCL and UK-based Compass Plus, the software vendor whose systems support the Q-Cash network.
Under their agreement, ITCL was required to pay support service fees to the vendor within stipulated deadlines but failed to do so.
In August this year, Compass Plus emailed ITCL 13 invoices claiming $550,000 in unpaid support fees for the 2019-2026 period. The vendor warned that it could suspend support services under Clause 5.1 of their agreement if the outstanding dues were not paid.
Earlier, in June, Compass Plus had also raised allegations of irregularities in software licence usage and violations of several terms of its distributor agreement.
ITCL was given 60 days to respond to and resolve the allegations but failed to do so, according to a Bangladesh Bank executive and an ITCL official.
They said the company had also failed to arrange alternative measures to keep banking services running through Q-Cash if the vendor suspended its support.
Compass Plus subsequently suspended the system licence remotely over alleged contractual violations, disrupting payment services for banks connected to the network.
ITCL cannot escape liability despite clearing dues
Following the disruption, a Bangladesh Bank inspection team conducted a special inspection at ITCL’s head office.
An executive director of the central bank and a senior ITCL official told TBS that the company had attempted to migrate its system without prior regulatory approval after the software vendor suspended its licence.
The move allegedly violated Section 8(4) of the Payment and Settlement Systems Act 2024. Such a violation is punishable under Section 37(5) of the law.
An ITCL official said that, following the inspection and mediation by Bangladesh Bank, the company immediately paid $135,000 to Compass Plus, allowing Q-Cash services to resume on the night of 6 October. ITCL also committed to paying the remaining dues in instalments.
The company paid another $118,000 on 29 October and agreed to pay $124,454 by 15 November and a further $174,000 by 30 December, the official said.
However, the central bank informed ITCL that settling the outstanding amount and restoring services would not absolve it of responsibility for attempting the system migration without approval.
The central bank requires payment system operators to obtain its approval before undertaking such system migrations.
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