Many important names are on the list of the 52 applicants including four state owned banks, digital money transfer agents like Bkash, Nagad,etc. Daraz and Pathao are on the list as new entrants like Allied Singular Islami PLc. Private Banks –at least ten- are there as shareholders and investors so its big league.
However, the problem is that these are all under the regulatory eyes of Bangladesh Bank and people are already asking if that institution has the capacity to manage such a complex techno sector. It already has a fair number of scandals including the Billion dollar heist and a new documentary on the issue has been making rounds. It's exposing the basic digital incompetence of the heisted outfit.
Startup is cheaper
It will be cheaper to set up a digital bank than a standard one. The minimum capital requirement is Tk125 crore compared to the Tk500 crore for a standard bank. Each sponsor will put up up Tk50 lakh minimum or 10% or Tk12.5 crore maximum.
These banks will be run as per the Banking Company Act, and specific guidelines will be finalized soon. As per guidelines, it’s not just about reaching out to the left out clients in the urban-rural financial world but also working towards a cashless society.
Mode of operations
“Digital banks will operate solely in the virtual realm. This will allow its customers higher access to services using digital devices. This will mean lesser number of people, investment in floor space etc and hence cheaper payment for services hence lower overhead and running cost. New services would be virtual debit cards facilities and instant personal loans that can be sanctioned almost immediately. A host of other digital services are being promised. “ Financial Express. 21/8/23)
Two sets of people are reacting to the digital banks' entry. The business community is worried that the entry of government owned banks with 50+ years of experience is not a healthy practice. They shall have many advantages which will make operations for the new banks much less advantageous.
But a much more gut reaction is coming from the average public who are seriously worried that this is a “cheap way to steal from the people.” Who is protesting the depositor?
The two big fears : BB heist and Haldar
The Bangladesh Bank in particular is digital security-wise weak and the 1 billion dollar heist has become a global example of that. The recent incidence of a digital scam by a company that had stolen millions in Nigeria and Sri Lanka but was allowed to operate in Bangladesh that duly scammed thousands shows its oversight capacity is weak as well.
And as always there is the Haldar example casting its shadow on the financial world. Although Haldar has been demonized as a person along with a few accomplices, Haldar could not have done much without the support of Sur and other officials of the BB. They all remain safe and the only victim is the depositor.
Three FB comments on the digital bank issue will reflect the public mood.
· Javed Iqbal : Taking loans from oneself after getting a bank license has many examples. 600% to 1000% profit assured. Now it can be done with much less investment with digital banks, only 125 crores.
· S.A/ Roman: When hackers can steal a billion overnight, how can I have confidence in digital banks?
· Partha Sarker :I think the idea is not that bad.. Only issue is its implementation. If the sole purpose is to invest something to withdraw multiple times more than that and then to become defaulter - that nothing is going to work.
Bangladesh Bank has a long way to go before it can gain public confidence which it has lost due to poor capacity and disregard. And the digital world is all pervasive but considered all unsafe too. Some measures are needed to restore public confidence before digital banking can really take off.