Nagad is on course to become Bangladesh's first digital bank

Nagad CEO Tanvr describes the moment as ‘historic’

Nagad Limited has received the final go-ahead to emerge as the first digital bank in Bangladesh, thrusting the country another step closer to a new era of banking.

The Bangladesh Bank gave the nod on Monday by adding it to the list of scheduled banks and handing a letter of approval to Nagad CEO Tanvir A Mishuk.

Central bank Governor Abdur Rouf Talukder, Deputy Governor Nurun Nahar, Executive Director Saiful Islam, Director Mohammad Shahriar Siddiqui, and Additional Director Monirul Islam were present on the occasion.

Nagad's Additional Managing Director Aminul Haque, Deputy Managing Director Mohammad Anwar Hossain and Chief External Affairs Officer Sheikh Shabab Ahmed were also in attendance.

Speaking to http://bdnews24.com, Tanvir described the approval as “historic”.

"Customers will no longer have to come to the bank, instead the bank itself will be in the palm of their hands," he said.

The digital bank of Nagad will offer loans at a single-digit interest rate without requiring any collateral, according to him.

He added that, in addition to this, the digital bank will address all issues related to the daily transactions of common people, including the introduction of small savings schemes.

Although he could not give a specific date when the banking will be launched, he said that the service will start “soon”.

WHY DIGITAL BANK

To reduce the use of cash and make transactions easier, the government decided to launch digital banks in an initiative to create a 'cashless society'.

After several years of preparation, the Bangladesh Bank started accepting applications for licences in June last year. On Oct 25, the central bank took a preliminary decision to grant digital bank licences 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 Digi10, BRAC's bKash and Bank Asia's Digital Bank Limited.

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

SERVICES

Digital banks will not be allowed to provide any over-the-counter services, nor will they have ATM machines. As a result, customers will have to rely on other banks or mobile financial services to deposit or withdraw funds. while making transactions using cards or QR codes.

While these banks can provide loans to customers at all levels within the country, the scope of foreign transactions is limited.

Digital banks must also follow all existing banking laws and enlist in the capital market within five years of inception.

These are part of the policy guidelines approved by Bangladesh Bank for digital banks.

According to the guidelines, a digital bank will have its head office in Bangladesh. This office will be used by the bank's management and support staff, where customer complaints will be logged and settled either in person or digitally.

But a digital bank will not be able to conduct customer transactions directly over the counter like conventional banks. It will also not have any branch, sub-branch, agent or window.

Customer accounts will be opened online in line with know your customer or KYC regulations. After opening an account, a customer can transfer and spend money online, via the networks of any other bank or MAFS agent, ATM booth, CDM and CRM systems.

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