By Shri Diptivilasa ji & Aman Bandvi.
The authors represent a public policy think tank. Views expressed are their own
Bangladesh is embracing the future, making strides in digital banking, and earning international recognition for its citizens’ achievements. This South Asian nation is stepping into the limelight with several positive developments.
The Bangladesh Central Bank is today, 21 June 2023, expected to approve a framework for establishing digital banks as part of the country’s transformation into a cashless society. The government aims for at least 75% of local transactions to be conducted digitally by 2027, targeting a “Smart Bangladesh” by 2041. Currently, 61 conventional banks are operating in the country, some of which already offer apps and digital services.
Under the bank’s draft guidelines, digital banks will not be required to offer any over-the-counter services or to have a physical presence other than head office operations. Banks must issue customers bank cards, QR codes, and other advanced technologies to facilitate transactions.
Digital banks must provide efficient, low-cost, and innovative financial products and services using “artificial intelligence, machine learning, blockchain, and other advanced technologies, according to the new BCB guidelines.
These banks must have paid-up capital of 1.25 billion takas ($11.55 million) each, considerably lower than the requirement for a conventional bank of 5 billion takas.
The BCB will introduce a Taka-Indian Rupee-based debit card to move towards digitization. This innovative step is intended to facilitate cardholders in shopping and paying bills domestically. Bangladeshis will have the facility to spend Rupees. This initiative is expected to reduce the hassle of money exchange and cut costs by at least 6%.
The measure coincides with Bangladesh’s government goal to modernize an economy beset by inflation and shrinking foreign reserves. Once the new guidelines are approved, the BCB expects mobile financial service providers, tech firms, FinTech companies, microfinance institutions, banks, and financial institutions to apply for operating licenses.
Making waves on an international scale
In the realm of international recognition, Bangladesh has been making waves. Parveen Mahmud, a prominent figure in the country, was recently awarded the ‘Top 50’ Women Global Awards 2023, signifying the increasing role of Bangladeshi women in global affairs3. Further, Nusrat Choudhury, a Bangladeshi-American, was confirmed as the first Bangladeshi-American federal judge by the US Senate, marking a milestone in the representation of the Bangladeshi diaspora in the US judiciary.
Bangladesh’s economic recovery efforts are also receiving a boost with a $400 million loan from the Asian Development Bank (ADB). Furthermore, two women scientists from Bangladesh were among the top 100 Asian scientists, underscoring the country’s commitment to scientific research and women’s empowerment.
These developments vividly depict Bangladesh’s journey toward a digital future, a strengthened economy, and an increased global presence. The future seems bright for Bangladesh as it continues to innovate and make its mark on the world stage.
Shri Diptivilasa ji has served the Indian government as a senior bureaucrat and is currently also an independent director with a large PSU bank. He has held various leadership positions like the Additional Secretary, Home Ministry Government of India and VC of DDA.
Aman has over 25 years of global corporate experience in various leadership and Board Advisory roles. He has a track record of corporate turn arounds and is on the Board of India Stem Alliance, India Blockchain Alliance, Defence India and The Purpose Coalition. He also runs a NGO, Samvedana, which is focussed on the welfare of ex-servicemen.
Digital banking refers to the use of digital technology to provide banking services online, allowing customers to perform transactions and manage their accounts without visiting a physical bank.
A cashless society is an economic state where financial transactions are conducted electronically rather than using physical cash, promoting digital payment methods.
Mobile financial services allow users to conduct financial transactions through mobile devices, including payments, transfers, and account management.
Economic growth is the increase in the production of goods and services in an economy over time, typically measured by the rise in Gross Domestic Product (GDP).
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