Digital banks in Bangladesh would be profitable within three years after starting their operation, said Abu Farah Md Nasser, deputy governor of Bangladesh Bank (BB).
“From my experience I have expectations that digital banks will be profitable within three years,” he said while speaking at a startup summit on Saturday.
However, he said the digital banks would be profitable only if they can efficiently cover untapped areas of the SME sector, which is actually the backbone of the country’s business and economy.
Startup Bangladesh Ltd, a flagship venture capital company of the government’s Information and Communications Technology (ICT) Division, organized the event at InterContinental Hotel in the city.
Speaking as the guest of honour, the Bangladesh Babk deputy governor said foreign investors are showing keen interest in digital banks, as the central bank is going to award its licence soon.
“Everyday foreign investors are asking about the status of digital banks, how many bank licences we are awarding, when we are starting, how to apply for the banks, etc,” he said while speaking at a session titled “How to Leapfrog Our Fintech Ecosystem – Way Forward.”
He said the digital bank guidelines kept the minimum capital requirement low, so that foreign investors could come.
“Now it is not the question whether the foreign investors are coming or not, rather the question is how many banks are getting licence.”
Real financial inclusions aren’t taking place by the MFS, he said, hoping that the digital banks would fill the gaps.
“We are currently discouraging three things for the digital banks: large and medium lending and foreign trades,” he added.
Meanwhile, the central bank has extended the deadline for submitting applications for digital bank licences to August 17, from the original deadline of Tuesday, August 1.
The extension was announced on Sunday in a press release signed by Saeda Khanam, director (publication) of the central bank.
The Bangladesh Bank said the extension was granted to give interested parties more time to prepare their proposals.
The Bangladesh Bank invited applications for the digital bank from entrepreneurs on June 21 this year.
According to the BB, the initial minimum paid-up capital required for establishing a digital bank is Tk125 crore, to be provided by the sponsors.
Each sponsor must hold a minimum shareholding stake of Tk50 lakh.
Sponsors’ contributions to the share capital of the proposed digital bank must come from their net worth declared to the tax authorities; any contributions from borrowings or sources other than net worth, including family members, will not be acceptable.
Additionally, a non-refundable application processing fee of Tk5 lakh should be paid.
