Digital banks in the works

The government is considering introducing virtual banks in the country to accelerate financial inclusion, and the Bangladesh Bank has already made the first draft of a guideline on this.

Finance Minister AHM Mustafa Kamal in his FY23 budget speech on Thursday said the government was going to examine the possibility of establishing digital banks in the country.

He said establishing such banks was either at the initial implementation or experimental stage in various developed countries as well as some developing ones in Asia, including Singapore, Malaysia, and India.

Huge employment opportunities would be generated for young IT workers once digital banks were established, Kamal said.

The central bank was formulating a guideline on the operations of digital banks, its Deputy Governor Abu Farah Md Nasser told The Business Post.

He said the first draft of the guideline was ready and work on the second was underway, adding digital banks would reduce operational costs of banks.

The guideline would be formulated according to the Bank Company Act and digital banks would have to comply with all its instructions, the central bank official also said.

“Digital banks are very much needed to reduce cash transactions and build a cashless society. Clients of such banks can transact by using QR codes instead of physically visiting bank branches,” Nasser explained.

Almost all banks in the country adopted digital financial services amid the Covid-19 pandemic apart from offering traditional banking services.

Bank Asia has already applied to the central bank for a digital bank licence. Its Managing Director Arfan Ali recently told The Business Post clients, especially the new generation, want to avoid visiting bank branches physically and this tendency had increased due to the pandemic.

“This encouraged us to think about introducing a virtual bank. The young generation conducts most of their daily activities digitally, especially shopping. Now they also want online banking services,” he said. He added the digital bank would be a subsidiary of Bank Asia and would be launched in partnership with Fintech companies.

A total of 61 banks are operating in the country at present.