Bangladesh Bank has taken the initiative to establish eight digital banks in the country, marking a significant development in the financial sector. Initially, ‘Nagad’ and ‘Kadi,’ both Mobile Financial Services (MFS), will commence operations as full-fledged digital banks. Furthermore, three entities, Bikash, Digi-10, and DigitalAll, have received approval to operate separate digital banking divisions. After the initial six months, three additional digital banks, namely Smart Digital Bank, Japan Bangla Digital Bank, and North East Digital Bank, are scheduled to commence operations.
Despite an apparent surplus of banks relative to economic demand, Bangladesh Bank introduced a ‘Digital Bank’ policy in June. Finance Minister AHM Mustafa Kamal announced the Digital Bank initiative during the budget speech for the 2023-24 financial year. Bangladesh Bank began accepting applications for digital bank licenses in late June, with the application deadline set for August 17. By the deadline, 52 applications had been submitted for digital bank establishment.
After a review, Bangladesh Bank’s spokesperson, Majbaul Haque, revealed that nine applicants were deemed eligible and presented to the Board of Directors. One application related to an insurance company was excluded, resulting in the approval of the remaining eight.
Three of the digital bank applications were submitted by existing banks: ‘DG-10,’ a collaboration among ten private banks, ‘Bikash Digital Bank,’ a joint application from BRAC Bank and Bikash, and ‘DigitalAll’ by Bank Asia. These banks were granted permission to establish separate digital banking operations based on the board’s decision.
In the technology sector, five companies received approval to establish digital banks: ‘Naqd Digital Bank,’ ‘Kadi Digital Bank,’ ‘Smart Digital Bank,’ ‘Japan Bangla Digital Bank,’ and ‘North East Digital Bank.’ Among them, Nagad Digital Bank and Kori Digital Bank will receive a Letter of Intent or Letter of Consent (LOI) immediately, while the remaining three will receive their LOIs after six months.
It is worth noting that a range of entrepreneurs, including Farid Khan, Chairman of Summit International, have joined Nagad Digital Bank, while Habibullah Neyamul Karim, CEO of Techno Haven and husband of former Finance Secretary Fatima Yasmin, is the primary entrepreneur behind Kori Digital Bank. Additionally, ten private sector banks have joined forces to receive digital bank licenses as DG-10, and they have collectively announced an investment of Tk 128 crore.
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