In a major move to reshape the country’s financial landscape, Bangladesh Bank has doubled down on its digital banking ambitions issuing a new regulatory framework that raises the minimum paid-up capital requirement for digital banks to Tk 300 crore, up from the previously proposed Tk 125 crore.

The central bank issued the notification on Sunday, marking a critical step toward licensing the country’s first fully digital banks – app-based financial institutions with no physical branches, ATMs, or cash deposit machines (CDMs).

The move signals BB’s intent to ensure financial stability, robust technological infrastructure, and long-term viability in the fast-evolving fintech sector.

Higher capital, stricter rules

The revised capital requirement, Tk 300 crore, is now significantly higher than the earlier proposal and brings digital banks closer to conventional banks, which require Tk 500 crore in paid-up capital.

However, unlike traditional banks, digital banks will operate entirely online, offering 24/7 services through mobile apps and digital platforms.

Notably, no physical plastic cards will be issued. Instead, customers will use virtual debit cards, QR codes, and other tech-driven payment solutions for transactions.

Under the new rules, digital banks will be barred from opening Letters of Credit (LCs), extending loans to large or medium industries, and operating physical branches or any cash-handling infrastructure such as ATMs and cash deposit machines.

Their lending mandate will be strictly limited to small loans, particularly targeting micro, small, and medium enterprises (MSMEs), freelancers, and unbanked populations – aligning with financial inclusion goals.

IPO mandate within five years

A key condition in the notification requires every approved digital bank to launch an Initial Public Offering (IPO) within five years of receiving final approval.

The IPO size must be equal to the initial investment made by the promoters, ensuring transparency and public ownership.

“This rule is designed to prevent digital banks from remaining privately controlled indefinitely,” said a senior BB official, who spoke on condition of anonymity. “It will encourage accountability and give retail investors a stake in the digital finance revolution.”

Global trend, regional push

Digital banks, also known as neobanks, are gaining traction worldwide, with India and Pakistan launching their first digital banking platforms in 2022. Bangladesh’s push comes amid rising smartphone penetration, growing digital payment adoption, and increasing demand for accessible, low-cost financial services.

“The future of banking is digital, contactless, and customer-centric,” said Dr. Khurshid Jahan, a financial sector expert at the Bangladesh Institute of Development Studies. “This framework is a step in the right direction, but success will depend on cybersecurity, interoperability, and consumer trust.”

What’s next?

With the regulatory framework now in place, industry players expect a flurry of applications from consortiums involving tech firms, financial institutions, and private investors. However, the strict lending and operational restrictions mean these banks will not compete directly with commercial banks – but instead fill critical gaps in last-mile financial inclusion.

As Bangladesh accelerates toward a cashless economy, the central bank’s bold move could pave the way for a new era of inclusive, innovative, and app-powered banking, one virtual transaction at a time.