Digital bank licence rules tightened, 3-year business track record now mandatory

The revised rules also increase minimum paid-up capital from Tk 1.25 billion to Tk 3 billion

Bangladesh Bank has introduced major changes to its digital banking policy, preventing any company without at least three years of continuous business operations from applying for a digital banking licence.

The revised guidelines, published Tuesday in Digital Bank Guidelines 2, also prohibit existing banks or non-bank financial institutions (NBFIs) from applying as sponsors of digital banks -- a departure from the 2023 version of the policy.

To qualify as a sponsor, a company must present audited financial statements for the past three consecutive years, reflecting ongoing operations. No company will be granted a licence immediately after incorporation, the central bank confirmed.

Assistant spokesperson Shahriar Siddique said, “A company can’t just be registered and get a licence. There must be an active business running for at least three years, and that will be assessed based on audited financials.”

The central bank has also made changes to sponsor and CEO eligibility, as well as digital operations and cybersecurity requirements.

Under the new rules, the paid-up capital requirement for digital banks has been increased from Tk 1.25 billion to Tk 3 billion.

In a significant move, no bank or financial institution is now eligible to apply as a sponsor. This restriction was absent in the earlier guidelines published in 2023, under which 10 private banks had applied jointly to establish a digital bank.

That joint initiative is no longer valid under the current rules.

“No separate licence will be issued to any finance or banking institution for digital banking. This clause wasn’t in the previous guideline. The application submitted by ‘DigiTen’ has been cancelled,” said Shahriar.

The revised policy requires that a digital bank CEO must have a minimum of 15 years’ experience in banking or fintech, including at least 5 years in technology-driven banking services.

Earlier, candidates needed 15 years of banking experience, with at least five years specifically in tech-based banking, regulation, or compliance. Shahriar clarified that this condition has been relaxed slightly.

“A person with 10 years in banking and 5 years in fintech, or vice versa, will now be eligible to become CEO,” he said.

The new policy also modifies board-level requirements. At least 50 percent of board members must have sufficient knowledge and experience in tech-based banking, emerging technologies, cyber law, or regulatory affairs.

The remaining members should have expertise in fields aligned with digital banking such as banking, e-commerce, banking law, economics, development studies, and social sciences.

The 2023 guidelines had similar provisions but were narrower in scope, focusing mainly on banking, e-commerce, and regulation. The updated version expands this to align better with the broader mission of digital banks.

Shahriar said, “Several new subjects relevant to digital banking have been included in the latest version.”

The guidelines strictly bar loan defaulters -- including companies, individuals, or family members associated with defaulted loans -- from becoming digital bank sponsors. Any ongoing legal disputes over loan defaults will also disqualify an applicant.

In addition, shell companies are prohibited from becoming sponsors. The guidelines define such entities as those registered in a country but lacking any actual business activity or assets in that jurisdiction.