BB approves digital bank guidelines
Staff Reporter :
The Bangladesh Bank (BB) approved digital bank guidelines on Wednesday keepinga provision for paid-up capital at Tk125 crore.
Spokesperson and Executive Director of the Bangladesh Bank, Md Abul Bashar, confirmed to the reporters about the approval.
The central bank board of directors on its 428th meeting approved the guidelines where the BB governor Abdur Rouf Talukder presided over the meeting.
Digital bank, also known as Neo-bank or virtual bank, offers all its services online, doing away with all the paperwork such as cheques, pay-in slips, and demand drafts. Such banks behave like any other scheduled commercial bank, and can offer loans and accept deposits.
According to the approved guideline, digital Bank license will be given under Banking Company Act 1991. The payment service will be operated under Bangladesh Payment and Settlement System Regulations, 2014.
The minimum shareholding of each sponsor will be Tk50 lakh (maximum 10% or Tk12.5 crore.
“The ceiling of 10%, in consultation with the government, may be relaxed in case of a digital bank formed as a joint venture of banks, financial institutes, microfinance institutions, MFS providers, fintech companies and technology firms or for a needed special case,” ), the guideline said.
A digital bank must go for an initial public offering (IPO) within five years from the date of the licence issuance by the central bank and the IPO amount should be minimum to the sponsor’s initial contribution.
Digital banking is part of the broader context for the move to online banking, where banking services are delivered via the Internet.
The major difference is digital banks will have only headquarters, and no other physical presence while conventional banks have physical presence across the country.
The business, governance and operational requirements applicable to traditional banks in general, shall continue to apply to digital banks, according to the guideline.
The central bank is going to introduce digital banks in Bangladesh at a time when new generation banks across the globe are turning away from traditional brick-and-mortar banks in favour of digital banking.
Among the South Asian countries, India and Pakistan introduced digital banks in 2022.
Currently, the banking sector is oversaturated with 61 conventional banks in Bangladesh.
Earlier, Nagad, the country’s second-largest MFS provider, was planned to set up a digital bank.
Nagad first approached the Bangladesh Bank for a digital bank licence in 2020 and following that the regulator moved to formulate guidelines in this regard.
