Bangladesh Bank Mulls Fresh Digital Bank Licenses
Bangladesh Bank has taken the initiative to issue new digital banking licenses in a bid to attract fresh investment into the fintech sector independently and beyond political considerations. A decision on the matter may be reached at the board meeting scheduled for August 27, according to sources.
Reportedly, the issue was discussed at a meeting on August 13, but the regulator felt the need to revisit the matter considering the current realities of the banking sector. Although Nagad Digital Bank PLC and Kori Digital Bank PLC were granted approval earlier, neither has commenced digital banking operations yet. In this context, the matter of issuing new licenses has come under discussion.
Bangladesh Bank first invited applications for digital banks in 2023, receiving 52 proposals. After preliminary screening, nine proposals were forwarded to the board. Among them, Smart Digital Bank, North East Digital Bank, and Japan-Bangla Digital Bank were given Letters of Intent (LOI) in addition to Nagad and Kori.
Meanwhile, bKash, DigiTen, and Digital Bank were allowed to open digital banking wings instead of being granted separate licenses, while the application from Pragati Life Insurance was rejected. Following the political upheaval of July 2023, which ousted the Awami League government, uncertainty loomed over Nagad Digital Bank PLC and Kori Digital Bank PLC, raising concerns about the sustainability of the digital banking initiative.
To break this stagnation, Bangladesh Bank is now reviewing the necessary infrastructure for digital banking. At the same time, the board of directors of the central bank is also carefully considering issues where some conventional banks failed to return depositors’ money.
Sources further indicated that, given the overall situation, applications for new digital banking licenses may soon be invited. Multiple sources within Bangladesh Bank confirmed that unlike the previous politically influenced process, this time applications will be evaluated under much more transparent and stringent standards.
