TDS Desk:

The Bangladesh Bank has increased the minimum capital requirement to Tk300 crore for a digital bank, a new banking concept in the country, according to a circular published on Sunday (August 24).

Earlier, the paid-up capital requirement was Tk125 crore for establishing a digital bank, according to the digital bank guideline formulated on 14 June 2023. A conventional bank requires Tk500 crore to get the licence.

The licence of the digital bank will be given under the Banking Company Act 1991. The payment service will be operated under the Bangladesh Payment and Settlement System Regulations, 2014, according to the approved guideline.

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, and the IPO amount should be a minimum of the sponsor’s initial contribution.

Digital banking is part of the broader context for the move to online banking, where banking services are delivered via the internet.

The major difference is that digital banks will have only a headquarters, and no other physical presence, while conventional banks have physical presence across the country.

The business, governance, and operational requirements applicable to traditional banks in general shall continue to apply to digital banks, according to the guideline.

The central bank is going to introduce digital banks in Bangladesh at a time when new-generation banks across the globe are turning away from traditional brick-and-mortar banks in favour of digital banking.

Among the South Asian countries, India and Pakistan introduced digital banks in 2022.

At present, Bangladesh’s banking sector is oversaturated with 61 conventional banks.