City Bank to invest nearly Tk14cr to set up digital bank
The consortium is yet to disclose the name of the proposed digital bank
The City Bank has decided to invest Tk13.88 crore to set up a digital bank.
The decision came at the bank's board meeting held on 7 August, reads a disclosure posted on the Dhaka Stock Exchange (DSE) website.
City Bank sources said the digital bank is a joint venture consortium comprising fin-tech and other firms where Bank Asia is a sponsor with 11.12% stake. The consortium has already applied to the Bangladesh Bank for a digital banking licence.
The consortium is yet to disclose the name of the proposed digital bank.
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City Bank's Managing Director Mashrur Arefin told The Business Standard, "We planned to invest in it because we felt the combined power of a few digitally advanced banks can go a long way in making the digital banking dreams of the government successful."
"The nine banks in this consortium already have nearly five crore customers. Each of the nine banks is fully automated and digitally savvy. Most importantly, every bank in this consortium enjoys huge customer trust and confidence in Bangladesh."
"So, we thought why not go to the next stage of banking business which, in this age and time, is definitely about going digital. Plus, combined initiative is cost effective for any individual bank," he added.
On 21 June this year, the Bangladesh Bank, after approving the guidelines for setting up a digital bank, called for licence applications from companies. The central bank has given companies only 41 days (till 1 August) to apply for a licence to set up a digital bank.
The Bangladesh Association of Software and Information Services (BASIS) has requested the central bank to extend the deadline till 31 August.
This July, Bank Asia applied to the central bank for the licence to establish the country's first ever digital bank. The bank will invest Tk12.5 crore to set up the digital bank.
Other companies like bKash, Nagad, Banglalink, Brac Bank, Padma Bank, ACI, Pragati Life Insurance, and Crystal Insurance are also keen to set up digital banks.
According to the central bank's guidelines, investors willing to set up a digital bank will have to have a minimum paid-up capital of Tk125 crore and the capital will have to come from sponsors.
The minimum shareholding of each sponsor will be no less than Tk50 lakh.
The guideline encourages fintech companies, tech firms, microfinance institutions, mobile financial service-providers, banks, and financial institutions to come into joint ventures for setting up digital banks.
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. Sponsors' shares cannot be transferred within five years from the commencement of the business, without prior permission from the Bangladesh Bank.
Digital banks will only have a headquarter, and no other physical presence or branches across the country.
A digital bank may issue virtual cards, QR codes, and other advanced technology-based products for facilitating its customers' transactions. But it is not allowed to issue any physical instrument for transactions.
Digital banks will not be allowed to transact in foreign currencies or involve in trade finance, except for collecting wage earners' remittances.
