NBFI vs. PSP License in Bangladesh: The Ultimate 2025 Guide
NBFI vs. PSP: Which Bangladesh Bank License Do You Need?
This guide provides a detailed comparison of the two primary financial services licenses in Bangladesh: the Non-Banking Financial Institution (NBFI) license (also known as a Finance Company) and the Payment Service Provider (PSP) license. Your business goal determines which license from Bangladesh Bank you must apply for.
⚖️ Practical Implication: NBFI
If your goal is to provide financing—such as loans, leasing, or structured investment—you must apply for a Finance Company Licence under the Finance Company Act 2023.
⚖️ Practical Implication: PSP
If your goal is to process digital payments or run an app/wallet (like an e-wallet), you need a PSP Licence under the Payment and Settlement Systems Act 2024.
Key Differences at a Glance
| Feature | Finance Company (NBFI) | Payment Service Provider (PSP) |
|---|---|---|
| Legal Foundation | Finance Company Act 2023 | PSSA 2024 |
| Core Activity | Lending, investing, leasing | Processing electronic payments |
| Holds Deposits? | Yes (Term deposits only) | No |
| Minimum Capital | ~ BDT 100 Crore (BB Directive) | ~ BDT 20 Crore (BB Directive) |
| Regulator Dept. | Financial Institutions & Markets | Payment Systems Dept. |
| Supervision Focus | Prudential & Governance | Operational & IT Security |
| Licence Tenure | Indefinite | 3 Years (Renewable) |
Comparison: Minimum Capital
The most significant initial barrier is capital. An NBFI license requires substantially more capital, reflecting its role as a lending institution.
How LegalSeba Can Help You
Navigating the complexities of Bangladesh Bank's licensing process is challenging. LegalSeba provides end-to-end advisory and legal support to ensure your NBFI or PSP application is accurate, compliant, and positioned for success.
1. Strategic Advisory
We help you choose the correct license (NBFI vs. PSP) and formulate a business plan that aligns with Bangladesh Bank's objectives.
2. Company Incorporation
Complete assistance with RJSC for incorporating your public limited company, a prerequisite for the application.
3. Documentation Drafting
Expert drafting of all required documents, including Memorandum (MoA), Articles (AoA), SOPs, and AML/CFT policies.
4. Application File Prep
We meticulously compile your complete application file, ensuring all forms, declarations, and technical documents are correct.
5. Regulatory Liaison
We act as your representative, communicating with Bangladesh Bank (BB) and BIDA to address queries and facilitate the process.
6. Post-License Compliance
Once licensed, we provide ongoing support to help you navigate operational compliance, reporting, and governance rules.
Detailed Side-by-Side Comparison: NBFI vs. PSP
Legal & Regulatory Framework
| Governing Law | Finance Company (NBFI): Finance Company Act, 2023 Payment Service Provider (PSP): Payment and Settlement Systems Act, 2024 |
| Primary Regulator | NBFI: Bangladesh Bank (Financial Institutions & Markets Dept) PSP: Bangladesh Bank (Payment Systems Dept) |
| Legal Nature | NBFI: A non-bank financial institution that takes term deposits and provides financing. PSP: A payment intermediary that facilitates electronic funds transfer. |
Business Scope & Function
| Core Business | NBFI: Financial intermediation—term deposits, loans, investments, leasing. PSP: Digital payment processing—e-wallet, merchant payments, fund transfer. |
| Can accept deposits? | NBFI: Yes, but only term deposits (not demand deposits). PSP: No, cannot accept or hold customer deposits as liabilities. |
| Can lend money? | NBFI: Yes, to individuals and businesses. PSP: No, PSPs cannot issue loans or make investments. |
Capital & Licensing Requirements
| Minimum Paid-up Capital | NBFI: ~ BDT 100 Crore (per BB directive) PSP: ~ BDT 20 Crore (per BB directive) |
| "Fit & Proper" Tests | NBFI: For promoters, directors, CEO (checked for default, financial integrity). PSP: For shareholders, directors, CTO/CISO (checked for AML/CFT, IT security). |
| Core Systems | NBFI: Must implement BB-approved Core Banking Solution (CBS). PSP: Must operate a PCI-DSS-compliant payment system with redundancy. |
Compliance & Oversight
| Supervision Focus | NBFI: Prudential supervision (capital adequacy, liquidity, governance). PSP: Operational & systems supervision (data integrity, cybersecurity, settlement risk). |
| Reporting | NBFI: Audited financials, prudential returns. PSP: Transaction, reconciliation, and fraud reports. |
| Capital Adequacy | NBFI: Required, as per BB’s CAR/Leverage framework. PSP: N/A (as non-lending entities). |
Foreign Ownership & Investment
| Foreign Shareholding | NBFI: Allowed with BIDA & BB approval; capped at 15% per shareholder (unless exempted). PSP: Allowed; foreign PSPs must form local subsidiaries and get BIDA & BB approval. |
| Tech Partnerships | NBFI: Permitted, subject to data localisation and BB oversight. PSP: Common, but settlement must occur within Bangladesh. |
NBFI License Deep Dive:
Finance Company Act 2023
This path is for entities focused on financial intermediation: lending, leasing, and taking term deposits. The regulation is "prudential," focusing on financial stability, capital adequacy, and governance.
NBFI Application Process (Finance Company)
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1
Submission to Fin. Institutions Dept.
Apply in writing to Bangladesh Bank's Financial Institutions & Markets Dept. using the prescribed form.
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2
Prudential Assessment
BB assesses financial health, management integrity, earning capacity, and public interest.
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3
License Grant & Conditions
If approved, BB grants an indefinite license, often with specific operational conditions.
NBFI Governance (Finance Company Act 2023)
Must include at least 2 Independent Directors.
Family Representation Limits
- Max 2 Directors: If family holds > 5% shares.
- Max 1 Director: If family holds 2% to 5% shares.
Director Tenure: Max 9 Years
A director can serve a maximum of 3 consecutive 3-year terms, followed by a mandatory 3-year "cool-off" period.
NBFI Capital Allocation Limits
NBFIs have strict limits on how they can invest their own paid-up capital and reserves.
PSP License Deep Dive:
Payment and Settlement Systems Act 2024
This path is for technology companies focused on payment processing. The regulation is "operational," focusing on system integrity, IT security, data privacy, and settlement risk.
PSP: Key Licensing Requirements
- Apply to: Bangladesh Bank (Payment Systems Dept).
- Governing Law: PSSA 2024.
- Minimum Capital: ~ BDT 20 Crore (per BB directive).
- License Tenure: 3 Years (Renewable).
- "Fit & Proper" Test: For Directors, CTO, CISO, focusing on IT security and AML/CFT compliance.
PSP: Core System & Compliance
- Must operate a PCI-DSS-compliant payment system.
- Must have system redundancy and real-time monitoring.
- Must appoint a CISO and Compliance Officer.
- Subject to BB technical/system audits and annual certification.
- Settlement of all transactions must occur within Bangladesh.
PSP: Operational Scope
✅ Permitted Activities
- Digital payment processing
- Electronic fund transfer
- E-wallet services
- Merchant payment aggregation
- Online/mobile transactions
🚫 Restricted Activities
- Cannot accept any deposits.
- Cannot lend money or offer credit.
- Cannot make investments with customer funds.
- Cannot hold customer funds as a liability (must be in a settlement account).
Further Reading & Resources
-
PSO and PSP License in Bangladesh →
A detailed guide from LegalSeba on the specifics of PSO and PSP licenses.
-
Fintech Licensing in Bangladesh (MFS, Digital Bank, PSP, PSO) →
An ultimate guide covering the broader fintech licensing landscape in Bangladesh.
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Bangladesh Bank (Official Site) →
The official website of the central bank and primary regulator.
