Private sector life insurance company Progoti Life Insurance has expressed interest in establishing a digital bank. Recently, the company’s board of directors made the decision in a meeting to move forward with this initiative. Being a publicly listed company, Progoti Life has shared this decision with investors as price-sensitive information.
According to information received from the Dhaka Stock Exchange (DSE) on Thursday, the company does not plan to set up the digital bank alone. Instead, it aims to collaborate with several other organizations to jointly establish the digital bank in Bangladesh.
Recently, the Bangladesh Bank invited applications from interested parties wishing to set up digital banks. Progoti Life Insurance announced that it will participate in this process and submit an application to Bangladesh Bank. If the company obtains approval, it plans to invest 5% of the paid-up capital of the new digital bank. This means Progoti Life Insurance will hold a 5% ownership stake in the venture.
According to the Bangladesh Bank’s guidelines, a digital bank must have a minimum paid-up capital of Tk 300 crore. Therefore, to acquire a 5% stake, Progoti Life Insurance will need to invest Tk 15 crore.
Under the central bank’s regulations, a digital bank will have a head office but no physical branches for customer service. That means it will not offer any over-the-counter (OTC) services. The bank will not have branches, sub-branches, ATMs, CDMs, or CRMs. All its services will be app-based and accessible through mobile or digital devices.
A digital bank will operate 24 hours a day, seven days a week, offering customers services through virtual cards, QR codes, and other advanced technology-based products. However, it cannot issue plastic cards for transactions. Customers will be able to use ATMs, agents, or other facilities of traditional banks for certain services.
Digital banks will not be allowed to open letters of credit (LCs) or provide loans to large or medium-sized industries. They will be permitted to offer small-scale loans only.
