Nagad gets final approval to become country’s first digital bank

Nagad Limited has received the license as the first digital bank in Bangladesh.

Bangladesh Bank (BB) gave the final approval on Monday by adding Nagad to the list of scheduled banks, paving the way to Bangladesh’s entry to the era of digital bank establishment.

Bangladesh Bank Director (BRPD) Mohammad Shahriar Siddiqui handed over a letter of approval to Nagad Limited Chief Executive Officer Tanvir A Mishuk.

BB Governor Abdur Rauf Talukdar, Deputy Governor Nurun Nahar, Executive Director Saiful Islam, and Additional Director Monirul Islam were present on the occasion.

On behalf of Nagad, Additional Managing Director of the company Aminul Haque, Deputy Managing Director Mohammad Anwar Hossain and Chief External Affairs Officer Sheikh Shabab Ahmed were also present.

After getting the final approval, Tanvir A Mishuk told the media, "Getting the license as the country's first digital bank is a historic moment for us."

Regarding the preparation of the digital bank, he said, "Customers will no longer have to come to the bank, rather the bank itself will go to the hands of the people. We will provide loans at single digit interest without any collateral. Besides, digital bank will solve all the problems related to daily transactions of common people, including the introduction of small savings schemes.”

Without mentioning any specific date when the banking will be launched, he said that the service will start soon.

Mentionable, to reduce the use of cash and make transactions easier, the government decided to launch digital banks as part of its initiative to create a 'cashless society'.

After several years of preparation, Bangladesh Bank started accepting applications for license from June last year. On October 25, the central bank took a preliminary decision to grant digital bank licenses to eight institutions out of 52 applications.

The companies approved in the first phase are Nagad, ACI's Kori, a joint venture of several banks Digi Ten, BRAC Bank’s initiative bkash and Bank Asia's initiative Digital Bank Limited.

After initially reviewing the services of these five digital banks, Bangladesh Bank has decided to grant licenses to three more to start operations.
Procedures of services

According to the policy, the digital banks will have a head office in Bangladesh. This office will be used as the office of the bank's management and support staff. Besides, the work of receiving and settling customer complaints either physically or digitally will be done in this central office.

But digital banks will not be able to provide transaction services to customers directly over the counter like conventional banks. This bank will not have its own branch, sub-branch, or agent or window. The banks can't even have their own ATM/CDM/CRM or tangible instruments.

Digital bank customer accounts will be opened online by following KYC.

They will not have any ATM booths of their own. After opening the account, the customer can transfer and use money online using any other bank or MFS agent, ATM booth, CDM, and CRM network. Money can be withdrawn from the account in the same manner.

Digital banks can introduce virtual cards, QR codes or any other advanced technology-based products to facilitate transactions.

This bank can give loans to any level of customers within the country, but the scope of foreign transactions will be limited. However, they will be able to receive remittances from abroad and operate FC accounts.

This bank can act as a paying bank on behalf of someone. Foreign currency transactions can be done on behalf of the customer subject to approval for education, treatment, travel or any other need abroad.

However, the bank cannot provide foreign trade loans, or finance term loans in large and medium industries.

The digital banks can provide loans to customers of any level within the country. The policy calls for giving priority to lending to marginal and SME sectors.