Application deadline extended to Aug 17

The application deadline for digital bank licences has been extended to August 17 this year, according to an official of Bangladesh Bank.

Md Sarwar Hossain, assistant spokesperson of Bangladesh Bank, yesterday told The Daily Star that they extended the deadline to give entrepreneurs more time to prepare detailed and quality applications with all the necessary documents.

The central bank invited applications for forming digital banks from June 21 this year and the deadline was set to end on August 1.

As per the central bank's rule, investors willing to set up a digital bank will have to have a minimum paid-up capital of Tk 125 crore and the capital will have to come from sponsors.

Any entity willing to set up a digital bank must be a public limited company. The minimum shareholding stake of each sponsor shall be Tk 50 lakh, it said.

The central bank said the sponsors or directors must qualify for the Fit and Proper Test (FPT) criteria applicable to the proposed directors of digital banks.

In its guideline issued earlier, Bangladesh Bank said digital banks will not be allowed to provide any service to clients directly through physical counters and cannot issue any physical instruments.

Likewise, digital banks would not be permitted to give out loans to carry out foreign trade or term loans for medium and large industries.

The guideline says a digital bank must go public within five years after getting the licence from the central bank.

The amount of capital to be raised through initial public offerings cannot be less than the paid-up capital amount.

The rule bars loan-defaulting companies, persons and their family members from becoming sponsor shareholders of digital banks.

No sponsor shareholder will be able to transfer shares without the prior approval of the central bank within five years of operation.

The guideline has kept the number of members from the same family who will be given permission to sit on the board in line with the Bank Company Act.