Digital Bank: Bangladesh Bank receives 52 applications

More than 500 companies altogether have filed 52 applications with Bangladesh Bank to secure the license to open digital banks.

The applicants include banks, financial institutions, mobile financial service providers, mobile operators, gas pump companies, pharmaceutical companies, corrugated sheet manufacturers and foreign financial technology companies. Four more companies paid fees but did not complete the application process.

Central bank spokesperson and executive director Mezbaul Haque told Prothom Alo, “Applications will be placed before the board of the director after completing their scrutinisation. Decisions will be taken then, and it takes time to scrutinise 52 applications.”

Bangladesh Bank sought applications for the Digital Bank License in the last week of June, which was closed at 11:59 pm on 17 August. The central bank is yet to finalise the date for issuing digital bank licences, as well as its number. There was a non-refundable application processing fee of Tk 500,000. For a digital bank, the central bank sets an initial minimum paid-up capital of Tk 1.25 billion. On the other hand, the ceiling of the minimum paid-up capital for a traditional bank is Tk 5 billion. Currently, 61 traditional banks operate in the country.

The guidelines to establish a digital bank state the minimum shareholding stake of each sponsor shall be Tk 5 million, and a digital bank’s board of directors preferably shall include at least 50 per cent of members having education, knowledge and expertise related to technology-based banking, emerging technologies, cyber laws and regulations; and remaining members shall have adequate knowledge and expertise in banking, e-commerce and banking laws and regulations and so like.

A digital bank shall have to maintain the minimum Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) prescribed by Bangladesh Bank from time to time under article 36 of Bangladesh Bank Order 1972 and section 33 of BCA, 1991 respectively, according to the guidelines.

Finance minister AHM Mustafa Kamal announced the launching of a digital bank in the country during his budget speech for the 2023-24 fiscal in parliament on 1 June this year.

Sources said a consortium of 10 private banks announced they will altogether invest Tk 1.28 billion to the sponsor shareholders of a proposed digital bank initiative styled "Digi10 Bank PLC". The banks in the initiative are City Bank, Eastern Bank, Pubali Bank, NCC Bank, Mutual Trust Bank, Dutch-Bangla Bank, Trust Bank, Prime Bank, Mercantile Bank and Midland Bank.

Brac Bank, one of the owners of leading mobile financial services provider bKash, applied for the proposed "bKash Digital Bank PLC." Other than Brac Bank, US-based Money in Motion LLC, the International Finance Corporation of the World Bank Group, the Bill and Melinda Gates Foundation, Ant Group, and SoftBank Vision Fund joined it.

Mobile financial service provider Nagad and several entrepreneurs also applied for the proposed "Nagad Digital Bank PLC". Three state-owned commercial banks – Sonali, Rupali and Agrani– applied for establishing a digital bank. Telecom operator Banglalink and its parent company, VEON Ltd. have also applied for a digital banking licence.

A consortium led by Upay, the mobile financial service of United Commercial Bank (UCB), applied for launching the Upay Digital Bank PLC. Other members of the consortium are NRB Commercial Bank, Meghna Bank, corrugated sheets manufacturer Aramit Ltd., Navana Pharmaceuticals and IT start-up Genex Infosys. Several entrepreneurs of private NRB Commercial Bank own Genex Infosys.

Ahsan H Mansur, executive director of the private research organisation Policy Research Institute, told Prothom Alo, "Banks are witnessing a volatile situation in the country. The central bank has failed to tackle it. People are not getting back their money after depositing it in financial institutions. In this context it should be considered how much it would time-befitting to issue the licence for digital banks. Anyone selected on whims gets the licence of these banks will cause a disaster."