Bangladesh Bank has selected bKash, Axiata’s Boost, Bhutan’s DK Limited and Veon, joint venture with Square Nova to receive letters of intent (LOI) for setting up digital banks, moving closer to launching a new branchless banking model in the country.
The central bank’s board approved issuing LOIs to the five applicants on Thursday.
Previously allowed local venture Kori Digital Bank was also allowed to proceed with preparations.
Bangladesh Bank Executive Director and spokesperson Arief Hossain Khan confirmed the decision to TIMES, saying the LOI holders would get time to fulfil regulatory conditions and prepare for operations before receiving final licences.
“LOI means they get some time to meet the conditions and prepare to launch the digital banks. Success will let them achieve the final licence,” he said.
Digital banks will operate without physical branches, conducting deposit-taking, lending and other banking activities entirely through digital platforms.
The move comes after 12 institutions applied for digital banking licences, including bKash Digital Bank, Boost by Axiata, Nova Digital Bank by Banglalink and Square, Bhutan’s DK Digital Bank, Kori Digital Bank and some other proposed ventures.
Under the updated digital bank rules, applicants must meet stricter capital requirements before obtaining final approval.
Khan said Kori Digital Bank, which had earlier received approval during the previous government, was required to increase its paid-up capital to Tk400 crore from the previous requirement of Tk200 crore under the earlier guideline.
Kori Digital Bank and Nagad Digital Bank received licences during the Awami League government. However, Nagad Digital Bank’s licence was later suspended during the interim government.
The latest move opens the way for major mobile financial service providers, telecom-linked companies and technology-backed ventures to enter the formal banking sector through digital-only platforms.
Industry players expect digital banks to expand access to financial services by reducing dependence on traditional branch networks and using technology-driven systems for customer onboarding, payments and lending.
