52 in race for 2-3 digital banking licences
Applications have been lodged individually as well as jointly, according to the central bank
A total of 52 domestic and foreign entities have filed applications for licence to set up digital banks when the Bangladesh Bank initially intends to extend permits only for two or three banks.
This array of applicants spans across diverse sectors, ranging from commercial banks and mobile financial services (MFS) to ride-sharing and food delivery platforms, IT service providers, and even pharmaceutical companies. Applications have been lodged individually as well as jointly, according to the central bank.
Md Mezbaul Haque, executive director and spokesperson of the Bangladesh Bank, disclosed on Sunday that the volume of applications substantially exceeded their projections since the launch of the digital banking guidelines. He underlined the meticulous nature of the ongoing verification process for all submitted applications before issuing licence.
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In accordance with the policy framework, the central bank's board is poised to issue letters of intent to those candidates who have applied and met the stringent eligibility criteria, he said.
A senior official from the Bangladesh Bank, who preferred not to be named, said that the bank's primary decision remains steadfast – to confine the digital bank count to a mere two or three. This strategic move reflects the overarching concern for the existing saturation within the banking sector, which currently houses 62 banks in the country, he added.
Digital Bank will operate without any branches, sub-branches, or ATM booths. There will be no in-person transactions.
Banking services will be provided to customers only using mobile and digital devices.
The central bank approved the Digital Bank guideline on 14 June.
In accordance with the guideline, the central bank introduced a web portal on 21 June to facilitate the online submission of applications for the 'Digital Bank' licence. The applicants were initially asked to apply for the licences by 1 August. However, since no applications were received within the deadline, the application period was extended until 17 August.
Application for Digital Bank should be made through digital method instead of submitting paper documents in the traditional method. All essential documents must be submitted in digital format. The application fee for this process is set at Tk5 lakh, which is non-refundable.
The Bangladesh Bank has set the minimum capital requirement for a digital bank at Tk125 crore when a conventional bank requires Tk500 crore to get the licence.
The minimum shareholding of each sponsor will be Tk50 lakh (maximum 10% or Tk12.5 crore), according to the guidelines of the Bangladesh Bank.
A digital bank will be governed by the Banking Company Act, says the guideline.
The policy also outlines a requirement for digital bank entrepreneurs to engage in a capital preservation agreement. In case a bank's capital falls below a certain threshold, entrepreneurs are obligated to provide additional capital. Individuals with outstanding debts are ineligible to become digital bank entrepreneurs.
Additionally, individuals with pending cases of loan defaults against them are not eligible to apply.
A consortium of 10 private sector banks in the country has collaboratively taken the initiative to launch a digital bank named 'DG10 Bank PLC.
The banks are – City Bank, Mutual Trust Bank (MTB), Eastern Bank Limited (EBL), Dutch Bangla Bank Limited (DBBL), Trust Bank, Prime Bank, Pubali Bank, National Credit and Commerce Bank (NCCB), Mercantile Bank and Midland Bank.
Four state-owned banks - Sonali, Agrani, Janata, and Rupali – also want to set up another digital bank.
State-run Mobile Financial Service (MFS) provider Nagad, bkash, mobile operator Banglalink, and digital services company Pathao have applied to get the licence to set up a digital bank as well.
