Nagad Limited Receives Final Approval to Become Bangladesh's First Digital Bank

On June 3, 2024, Nagad Limited received the final approval from Bangladesh Bank to operate being the country's first full-fledged digital bank. Tanvir A Mishuk, CEO of Nagad Limited, received the letter of approval from Abdur Rouf Talukdar, Governor of Bangladesh Bank, marking a significant milestone in Bangladesh's financial sector.

The approval follows Bangladesh Bank's 430th board meeting, where it was decided to issue letters of intent (LoIs) to Nagad Digital Bank PLC and Kori Digital Bank PLC. Nagad was the only entity to get all conditions within the stipulated time, setting the stage for its transformation into a digital bank.

Why this matters: This development marks a significant milestone in Bangladesh's financial sector, paving the way for a digital banking era. The successful launch of Nagad Digital Bank is expected to have a ripple effect, inspiring other digital banking initiatives and promoting financial inclusion across the country.

Nagad Digital Bank aims to serve individuals who face challenges in visiting traditional banks by providing banking services at their fingertips. The digital bank plans to offer single-digit interest on loans to individuals outside conventional business sectors without collateral requirements. "We have been advocating for a digital bank to transform Bangladesh into a smart economy through cashless transactions. A significant portion of the country's people remains out of financial inclusion, and Nagad Digital Bank will work with them," said Tanvir A Mishuk.

Nagad has onboarded 9.5 crore people in just five years, showcasing innovations and advanced technology in mobile financial services. The company has partnered with Silverlake Group, a leading banking solutions company, and is working on credit rating capabilities using artificial intelligence. This technological edge is expected to facilitate a seamless transition to digital banking.

The digital bank will function like all scheduled banks in the country but will operate primarily through digital channels such as websites and mobile apps, eliminating the need for physical branches. Customers will benefit from the convenience of managing their finances from anywhere at any time. "Customers will no longer need to visit banks; instead, banking services will be at their fingertips," Mishuk added.

The Bangladesh Bank granted an exemption to three foreign shareholders, Osiris Capital Partners LLC, Blue Haven Ventures LLC, and Finclusion Ventures Pte Ltd, allowing them to hold more than 10% of the bank's shares. This move is seen as a strategy to attract foreign investment and bolster the bank's capital base.

Nagad Digital Bank is expected to launch its services soon, with plans to introduce micro savings schemes and provide solutions to people's day-to-day transactions. The bank's innovative approach aims to address the financial needs of common people and promote financial inclusion across Bangladesh.

This development marks a historic moment for Bangladesh's financial sector as it embraces the digital banking era. The successful launch of Nagad Digital Bank is anticipated to pave the way for other digital banking initiatives in the country.

Key Takeaways

• Nagad Limited receives final approval from Bangladesh Bank to operate as country's first full-fledged digital bank.
• Nagad Digital Bank aims to provide banking services at customers' fingertips, promoting financial inclusion.
• The digital bank will offer single-digit interest loans without collateral requirements to individuals outside conventional business sectors.
• Nagad has partnered with Silverlake Group and is working on credit rating capabilities using artificial intelligence.
• The digital bank will operate primarily through digital channels, eliminating the need for physical branches.