The High Court on Tuesday directed the government and Bangladesh Bank to explain within 10 days why the appointment of an administrator to Nagad, the state-owned mobile financial service provider, should not be declared illegal for non-compliance with the Payment and Settlement Systems Act, 2024.

The court issued a rule asking the finance and telecommunications secretaries, the Bangladesh Bank governor, and Nagad administrator Muhammad Badiuzzaman Dider to respond.

The vacation bench of Justice Farah Mahbub and Justice Muhammad Mahbub Ul Islam passed the order after hearing a writ petition filed by Md Shafayet Alam, an independent director of Nagad.

The writ challenged the central bank’s August 21 decision to appoint Dider, a former director of Bangladesh Bank’s Chattogram office, as Nagad’s administrator following allegations of operational irregularities affecting its 9 crore customers.

Shafayet, who holds a 13 per cent share in Nagad, filed the petition after his directorship was terminated following the administrator’s appointment.

Although the High Court refrained from staying the central bank’s decision, it has sought justifications for the move.

According to Nagad’s counsel Mustafizur Rahman Khan, the High Court refused to stay on the activities of the administrator as it has already assumed control, and his tenure is set for one year under the Bangladesh Bank’s directive.

The case raised questions about regulatory oversight and compliance with the new law governing payment systems.

Nagad’s defence team includes lawyers Muhammad Zamiruddin Sircar and his junior Nawshad Zamir while Bangladesh Bank is being represented by attorney general Md Asaduzzaman, and lawyers BM Elias and ASM Sazzad Haider.