Bangladesh Bank has put on agenda for its next board meeting to be held on August 27 the topic of issuing new digital bank licenses.
The move comes amidst internal opposition to issuing new digital bank licenses and uncertainties lingering over digital bank licenses granted in 2023, an executive director of the central bank told UNB on Thursday.
In the last board meeting on August 13, several directors of the Bangladesh Bank spoke against approving new digital banks, citing the current state of the banking sector with several conventional banks struggling to repay depositors.
Many of the central bank board members also had argued that the digital infrastructure was not yet fully ready.
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The central bank might soon invite applications for new digital banks licenses.
It first issued licenses for digital banks in 2023, when 52 applications had been submitted. After an initial review, nine applicants made it to the board.
Five of the applicants —Nagad, Kori, Smart Digital Bank, North East Digital Bank, and Japan-Bangla Digital Bank— received Letters of Intent (LoI). Other applicants like bKash, Digi Ten, and Digital Bank were instead authorised to open digital banking wings, while Pragati Life Insurance's application was rejected.
Sources at the central bank said that the new approval process would be significantly more transparent and adhere to much stricter criteria than followed during the past Awami League regime, when the process of issuing licenses could easily be politically influenced.
The central bank suspended Nagad's license after the incumbent government assumed power while Kori Digital Bank is yet to get its final license.
Reports suggest that the ownership of these banks was structured through US and Singapore-based shell companies, allegedly to launder money.
Nagad is owned by five foreign companies registered in the US and Singapore - Finclusion Ventures (Singapore), Blue Heaven Ventures, Osiris Capital Partners, Zen Fintech, and Troope Technologies (US).
Kori Digital Bank, on the other hand, is owned by four US-registered companies whose true identities and financial conditions are unknown.