Following this announcement, the investment is set to represent 10% of the total paid-up capital of the proposed digital bank, according to the press release posted on the Dhaka Stock Exchange website.
The bank’s share remained at TK 20.20 at the moment, with the aim to increase the sum in the future.
Also known as a Neobank or a virtual bank, a digital bank operates online exclusively, without the need for a traditional physical branch of networks or services. A digital bank needs to go for an initial public offering (IPO) within the first five years from the date of getting a license from the central bank. The shares coming from sponsors can not be transferred within five years from the commencement of the business, without the permission that needs to be given prior by the Bangladesh Bank.
Furthermore, they are not given the authorisation to carry out transactions in foreign currencies, nor to engage in trade finance. However, it has the capability to collect wage earners’ remittances.
The guideline offers fintech firms, microfinance institutions, banks, financial institutions, tech companies, as well as mobile financial solution providers the needed information for them to come into joint ventures for setting up digital banks.
After having the guidelines approved, the Bangladesh Bank made it possible for entrepreneurs, financial institutions, and firms that are interested in establishing a digital bank to make applications until the 1st of August 2023. This means that companies have up to 41 days to apply. Moreover, the Bangladesh Association of Software and Information Services (BASIS) required the bank to extend the deadline until the 31st of August 2023.
Investors that are willing to set up the digital bank will need to have a minimum of Tk 1,25 billion paid-up capital, as the sum will come from various sponsors as well. The minimum shareholding of sponsors will be at least Tk 50 lakh and no more than 10% of the total sum, or Tk 12,5 crore.
The digital bank will have the possibility to issue virtual cards, QR codes, as well as other technology-based solutions and services in order to meet the needs and demands of customers and to facilitate their transactions.
According to the guidelines, half of the board members need to have adequate knowledge and experience in the technology-based banking industry, as well as emerging technologies, regulations, and laws of the cyber industry. The other half of the members need to have experience and knowledge of banking and ecommerce laws, regulations, and restrictions.
The name of the digital bank is yet to be disclosed.
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