Bangladesh Bank has set a new minimum paid-up capital requirement of Tk 300 crore for the country’s digital banking sector, a significant increase from the previous Tk 125 crore.
The directive, issued on August 21 by the central bank’s Banking Regulation and Policy Department, signals that digital-only banks must strengthen their capital base before moving to full-scale operations. Officials believe this measure will help bolster investor confidence and protect depositors as Bangladesh transitions to a cashless economy.
So far, eight digital banks have received initial approval, or Letters of Intent (LoI), from the central bank. While this allows them to begin preparations, none have yet started full commercial operations.
The journey began in June 2023 when Bangladesh Bank’s board approved the Digital Bank Guidelines under the Bank Companies Act, 1991, formally paving the way for branchless, app-based banking. Following the approval, applications were opened two months later, receiving proposals from over 50 institutions, including top banks, mobile financial service providers, and fintech companies.
The guidelines set by the regulator are extensive. Digital banks must be established as public limited companies and operate without branches or ATMs, offering services solely through apps, virtual cards, and QR codes. A head office in Bangladesh is mandatory for oversight and customer support.
Ownership rules are strict. Sponsors must invest from their declared net worth, with borrowed funds prohibited. Loan defaulters are barred from participating, and each sponsor must contribute a minimum of Tk 50 lakh. Individual stakes are capped at 10 percent, and shares cannot be sold within the first five years without prior approval to ensure long-term commitment.
Leadership requirements are also stringent. The CEO must have at least 15 years of banking experience, including five in technology-driven finance, with appointments subject to Bangladesh Bank’s approval. The board structure is regulated to prevent the concentration of power within a single family.
Digital banks must comply with the same prudential rules as traditional banks, including maintaining Basel III capital adequacy standards and joining the Deposit Insurance Scheme. They must also establish a tech-driven grievance redressal system, replacing the need for physical counters.
One of the most notable requirements is the IPO mandate. Within five years of receiving a license, each digital bank must go public, raising at least the equivalent of the sponsors’ initial capital contribution. Regulators say this will enhance transparency and broaden public ownership.