Bangladesh Bank has taken a major step toward making the banking system more accessible, technology-driven, and inclusive.
As part of fully modernizing the country's financial sector, five institutions have been given preliminary approval to operate digital banks.
Out of 12 applications scrutinized, four new institutions have been issued a 'Letter of Intent' (LoI), according to Bangladesh Bank Spokesperson Arif Hossain Khan.
These institutions are bKash Digital Bank, Bhutan's DK Bank affiliate DK Digital Bank, Banglalink's parent company VEON's Digital Bank, Square Group's Nova Digital Bank, and Robi Axiata's Boost Digital Bank.
Earlier, in October 2023, Nagad and Kori Digital Bank were granted preliminary letters of intent.
Both institutions were directed to build the necessary infrastructure within six months (by April 2024) and apply for a full licence.
Having met the designated conditions, Nagad was granted a full license in June 2024, while Bangladesh Bank renewed Kori Digital Bank's LoI.
A digital bank is a type of banking system that has no conventional physical branches.
These banks conduct their entire operations digitally through websites or mobile applications.
Although this type of bank has no customer service centers or branch offices, it maintains a head office for administrative functions.
Simply put, users can access all banking services online without visiting a bank in person.
Over the last decade and a half, the growth of electronic transactions and payment methods, along with the widespread expansion of Mobile Financial Services (MFS), has significantly increased the adoption of digital financial services.
This shift provided the primary momentum to further accelerate the digital banking framework.
According to a 2025 Bangladesh Bank report, Mobile Financial Services (MFS)—launched in 2011—gained rapid popularity, reaching 54% of the population by 2024.
MFS usage saw particularly significant growth in rural areas, where conventional banking networks remain limited.
Nature and operations of digital banks
A digital bank will function as a public limited company with a paid-up capital of Tk300 crore, maintaining its head office in Bangladesh.
The bank will not operate any of its own branches, sub-branches, agents, or proprietary ATM booths; however, it can utilize virtual cards, QR codes, and existing ATM or MFS networks of other banks for transactions.
Subject to compliance with guidelines issued by Bangladesh Bank, digital banks can leverage existing networks of other conventional banks, mobile financial services, ATMs, CDMs, and CRMs instead of deploying their own agents, ATMs, CDMs, or CRMs.
The bank will not have any branches, sub-branches, windows, agents, or proprietary ATMs, CDMs, or CRMs.
To facilitate transactions for customers, it can issue virtual cards, QR codes, or other advanced tech-driven products.
Accounts in digital banks must be opened by collecting customer identification information entirely afresh.
Digital banks may process inward remittances provided they maintain digital records and comply with the existing regulatory framework.
They can provide financing and loans across all sectors except foreign trade loans and medium-to-large industrial loans.
Customer service for digital banks may be delivered through third parties, subject to Bangladesh Bank approval.
However, no cash deposits or cash withdrawals will be permitted at such customer service centers.
Regarding the formation of the board of directors, digital banks must strictly comply with the "Bank Company Act, 1991" (including its amendments) and all instructions issued by Bangladesh Bank.