Much-hyped digital-bank operations get caught up in limbo with almost no progress in the launch of this virtual banking for the tech-savvy younger population, sponsors deplore.
In fact, the country's banking regulator is still in wait for responses to some of its queries as part of its screening against the documents submitted by the sole licence-holding Nagad Digital Bank although the stipulated timeframe of launching the virtual banking expired almost two months ago.
Under such unexpected circumstances, officials, bankers and technologists air fear of early nemesis before operation of the new form of AI-driven banking services here.
Bangladesh Bank (BB), the country's central bank, on June 14, 2023 issued a comprehensive guideline for digital bank before seeking application for licence from the interested companies.
In response to the regulator's call, a total of 56 institutions applied for securing licence to run the branchless-banking services. After screening proposals of the participants, the BB issued letter of intention (LoI) to two companies--Nagad Digital Bank and Kori Digital Bank-on conditions to be met by them to become eligible for getting licence.
Seeking anonymity, a BB official has said they only gave licence to Nagad Digital Bank on June 03 last with a condition of starting its operations within six months of licensing.
But, after the changeover in state power following the July-August mass uprising, the official said, the banking regulator started crosschecking other information like source of funds locally and domestically and sponsors' background to ensure regulation.
"We also engaged Bangladesh's overseas missions to get information regarding foreign sources of funds. But we're yet to get detailed information," the official said.
Asked about the fate of the much-talked-about virtual banking operations, the central banker did not give any convincing answer, saying that BB's senior management will decide about the matter.
"But we're still waiting for the responses although the timeframe for launching such banking services under the licence got expired on December 03, 2024," the official added.
Under the digital-banking guidelines, the minimum shareholding stake of each sponsor shall be Tk 5.0 million and the maximum shareholding stake can be relaxed, if necessary, in consultation with the government.
A digital bank will have only a registered head office that will host the offices of management and supporting staff. There will be no over-the-counter (OTC) service, branch or sub-branch, ATM/CDM/CRM of its own.
According to the guidelines, a digital bank shall commence with the paid-up capital of minimum Tk 1.25 billion or as determined by the BB under section 13 of the Bank Company Act 1991. The paid-up capital shall only comprise ordinary shares.
The digital bank must go for public offering (IPO) within five years from the date of licensing and the amount of IPO should be a minimum of the sponsors' initial contributions.
The ground rules also say sponsors' share shall not be transferred within a period of five years from the commencement of the business without prior permission from the BB and the central bank will not allow transfer of sponsors' share within three years of the start of the banking business.
Contacted, founder and chief executive officer of Priyo Pay, a cross- border payment-service-providing platform, Zakaria Swapon said giving licence to only one party questioned the whole procedure.
"If the process was transparent, we would not probably have seen such situation," he said.
According to the technology expert, the failure of launching the operation within the timeframe means the licence-holders were not ready to give the service to the people despite Nagad's repeated assurance of starting the service.
He says the service of digital bank is a highly demanding affair in a densely populated country like Bangladesh where the number tech-savvy population is quite high.
"I think the central bank should take a lesson from its initial experiences and restart the process in a transparent way without any form of influence from outsiders," Mr Swapon suggests.
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