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Another publicly traded company, Pragati Insurance, has decided to become a sponsor shareholder of a proposed digital bank named ‘Pragati Digital Bank PLC’.
In a stock exchange filing on Monday, the general insurer said its board of directors has decided to invest Tk 125 million in the proposed digital bank, along with other sponsors.
The investment amount is 10 per cent of the total paid-up capital of Tk 1.25 billion of the proposed digital bank.
The investment will be done subject to approval from concerned regulatory authorities, said the company.
Meanwhile, more than 10 listed banks and four firms have already shared their plans to invest in digital banks in a move to provide digital services or cashless transactions to their clients.
Ten listed private banks have already formed a consortium to set up a digital bank -- Digi10 Bank PLC -- while Bank Asia and BRAC Bank have also shared their decisions to become sponsors for two other digital banks to meet the demands of tech-savvy customers.
ACI, one of the leading conglomerates in Bangladesh, decided to invest Tk 100 million in digital banks, while Crystal Insurance, Pragati Life Insurance and Unique Hotel & Resorts also decided to invest Tk 125 million each in digital banks.
The Bangladesh Bank invited applications for proposals to form digital banks on June 21. The deadline was initially set at August 1 this year. But, it was later extended to August 17 to give entrepreneurs more time to prepare detailed applications with the necessary documents.
As per the guidelines, a digital bank will have a minimum paid-up capital of Tk 1.25 billion. The capital will come from sponsors.
Sponsors’ shares cannot be transferred within five years from the commencement of the business, without prior permission from the Bangladesh Bank.
The guidelines are aimed at inspiring fintech companies, tech firms, microfinance institutions, mobile financial service providers, banks, and financial institutions to come up with joint ventures for setting up digital banks.
A digital bank must go for an initial public offering (IPO) within five years from the date of getting the licence from the central bank, according to the guidelines.
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.
It may issue virtual cards, QR codes, and other advanced technology-based products to facilitate transactions.
Listed in 1996, Pragati Insurance’s stock closed at Tk 63.30 on Monday, losing 2.76 per cent over the previous day.