Four state-owned banks, Daraz want to set up digital banks

Four state-owned banks – Sonali, Agrani, Janata, and Rupali – as well as Daraz Bangladesh, in collaboration with local firms, are planning to set up digital banks.

"We (four banks) are set to apply for a digital bank licence from the Bangladesh Bank today, the last date for application," a managing director from one of these banks, who preferred to be unnamed, said.

The respective bank boards have already approved this initiative, and the application will be submitted through the Bangladesh Bank's web portal, he added. 

On the other hand, AHM Hasinul Quddus (Rusho), chief corporate affairs officer of Daraz Bangladesh, told The Business Standard that the company intends to apply for a digital bank licence from the Bangladesh Bank. 

"Our commitment to 'Uplifting community through the power of commerce' drives us to fully support the establishment of a digital bank by the Bangladesh Bank," said Rusho. 

"We see digital banks as a crucial catalyst for inclusive economic growth, allowing us to extend financial services and innovation to underserved areas and MSMEs," he said. 

Daraz, one of the largest e-commerce platforms in the country, envisions the Daraz Digital Bank PLC as a tool to empower rural and semi-rural communities, leveraging their global experience in technology and fintech to provide financial tools for entrepreneurship development, women's empowerment, financial literacy, vocational training, community development, and addressing unmet needs, added Rusho. 

The company aims to align with the government's goal of a cashless society within the next 3-4 years and seeks like-minded partners to make a positive impact on the lives of people in Bangladesh.

The application deadline for digital bank licences is set to expire on Thursday. 

As of Wednesday, the Bangladesh Bank has received around 20 applications for setting up digital banks.

Additionally, numerous banks are opting to invest in digital banks through consortium formations.

For instance, City Bank has declared an investment of Tk13.88 crore to establish a digital bank in collaboration with nine other banks, including Mutual Trust, Eastern, Dutch-Bangla, Trust, Prime, Pubali, NCC, and Midland.

While telecom operator Banglalink initially planned to join the consortium, it later decided to set up a digital bank independently along with its parent company, according to Banglalink sourced.

Leading mobile financial service providers, bKash and Nagad, are also considering establishing digital banks individually. bKash has applied for name clearance for a digital bank in partnership with Brac Bank,  as confirmed by a source from the relevant authorities.

Bank Asia's board has decided to invest Tk12.5 crore to acquire a stake in a digital bank, according to a bank disclosure notice.

What differences will digital banks make?

Digital banks are set to bring significant changes to the banking landscape. 

Operating solely in the virtual realm, they provide enhanced accessibility, enabling customers to carry out transactions and access services through internet-connected devices. 

With lower overhead costs compared to traditional banks, digital banks can offer competitive fees and improved interest rates. 

Customers of digital banks can benefit from virtual debit cards for secure online transactions and instant personal loan facilities that utilise technology for streamlined approval and disbursement processes.

By embracing technological innovation, digital banks offer efficient and user-friendly banking experiences.

Requirements for a licence

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.

A digital bank will be governed by the Banking Company Act, according to a guideline the Bangladesh Bank has finalised for placing in the next board meeting scheduled next week.

The minimum shareholding of each sponsor will be Tk50 lakh (maximum 10% or Tk12.5 crore), the guideline says.