Bank Asia to invest in digital bank
It looks to contribute 10pc to the paid-up capital
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Bank Asia has decided to be a sponsor shareholder of a proposed digital bank by investing Tk 125 million in a move to provide digital services or cashless transactions.
The investment amount is 10 per cent of the total paid-up capital of the proposed digital bank, said the lender in a disclosure posted on the Dhaka Stock Exchange website on Sunday.
Despite the news, the bank's share remained stuck at the floor at Tk 20.20.
Digital bank, also known as Neobank or virtual bank, operates exclusively online without traditional physical branch networks.
The major difference is that digital banks will have no physical presence other than registered headquarters, while conventional banks have physical presence across the country.
After approving the guidelines, the Bangladesh Bank last month invited applications from entrepreneurs interested in establishing a digital bank.
The central bank will accept applications until August 1 this year.
As per the guidelines, investors willing to set up a digital bank will have to have a minimum paid-up capital of Tk 1.25 billion, and the capital will come from sponsors.
The minimum stake of each sponsor will not be less than Tk 5 million and not more than 10 per cent or Tk 125 million.
A digital bank must go for an initial public offering (IPO) within five years from the date of getting licence from the central bank.
It may issue virtual cards, QR codes, and other advanced technology-based products for facilitating customers' transactions.
Digital banks will not be allowed to carry out transactions in foreign currencies or engage in trade finance. It will, however, be allowed to collect wage earners' remittances.
Sponsors' shares cannot be transferred within five years from the commencement of the business, without prior permission from the Bangladesh Bank.
Earlier, Finance Minister AHM Mustafa Kamal, in his budget speech, announced the launch of digital banking in Bangladesh in the new financial year.
Listed in 2004, Bank Asia's net profit grew 13 per cent year-on-year to Tk 3.05 billion in 2022, thanks to higher income from export-import business. The bank disbursed 15 per cent cash dividend for 2022.
The bank's profit also grew 8.13 per cent year-on-year to Tk 1.33 billion in the first quarter through March this year.