Bangladesh has approved guidelines for digital banks to promote financial inclusion, according to officials.
The guidelines, approved by the Bangladesh Bank (BB), allow digital banks to operate in various areas except trade financing and term loans to medium and large industries.
The digital banks will be required to obtain a license from the central bank and follow the Bangladesh Payment and Settlement System Regulation 2014 instructions for their payment services.
They must also have a minimum paid-up capital of Tk 1.25 billion ($14.7 million) or as determined by the BB.
The ownership of each digital bank is expected to involve at least one-third of ownership by technology sector organizations or entrepreneurs, as demanded by tech industry entrepreneurs in the country.
Digital banks will operate solely through an online end-to-end tech-based digital ecosystem, without physical branches or over-the-counter services.
The guidelines emphasize using advanced technologies such as artificial intelligence (AI), machine learning, and blockchain to provide efficient, low-cost, innovative financial products and services.
The banks may issue virtual cards, QR codes, and other technology-based products for customer transactions, but physical instruments for transactions are not allowed.
The guidelines also outline requirements for appointing a digital bank’s chief executive officer (CEO), including at least 15 years of experience in the banking profession with a focus on technology-based banking.
The government of Bangladesh is planning to borrow Tk 1,55,395 crore ($18.3 billion) from internal sources and Tk 1,02,490 crore ($12 billion) from external sources in the fiscal year 2024.
The National Board of Revenue (NBR) is expected to miss its tax collection target for the 11th consecutive year, despite a surge in tax collection in May.
The main challenge in the budget will be controlling inflation, and there is a need for increased allocations in the social safety net sector to help low-income groups cope with rising inflation.
According to experts, education and employment are also highlighted as areas requiring attention in budget allocation.