Digital Banks in Bangladesh After the September 2026 Approvals: What Must Happen Before Launch

Digital banks in Bangladesh: from letter of intent to licence

Digital banks in Bangladesh moved a decisive step closer to launch on 24 September 2026, when the Bangladesh Bank board, chaired by Governor Md Mostaqur Rahman, cleared four new digital bank proposals and decided to issue a letter of intent to a fifth, Kori Digital Bank, whose earlier approval had stalled.[2] [4] The four new names are bKash Digital Bank, Nova Digital Bank, Boost Digital Bank and a venture backed by Bhutan's DK Bank. Each now holds an in-principle approval, not a banking licence.

The distance between a letter of intent and a live app is substantial. Applicants must place Tk 300 crore of unencumbered paid-up capital under lien, satisfy fit and proper tests for sponsors, directors and senior management, stand up tier-three data centres and in-country cloud, pass an international ICT audit, and build KYC, AML/CFT, outsourcing and data protection controls that Bangladesh Bank will test before it grants a licence under section 31 of the Bank Company Act 1991.[1] This alert sets out what was approved, what each applicant must complete before launch, and what investors and partners should check now.

Summary: On 24 September 2026 Bangladesh Bank approved letters of intent for five digital banks: bKash Digital Bank, Nova Digital Bank (VEON and Square Group), Boost Digital Bank (Axiata), the DK Bank of Bhutan venture, and Kori Digital Bank. None is licensed yet. Final licences under the Bank Company Act 1991 depend on meeting the Guidelines to Establish Digital Bank (Version 2, August 2025), including Tk 300 crore capital, governance, technology and compliance conditions.

Key point: A letter of intent lapses automatically if the applicant fails its conditions or misses the stipulated filing time, and false or misleading information exposes sponsors to punishment under section 109(2) of the Bank Company Act 1991. Treat the next phase as a licensing project with deadlines, not a formality.

At a glance

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Table of Contents

What Bangladesh Bank approved on 24 September 2026

The board decision covered five ventures. Four were drawn from the second application round: bKash Digital Bank, sponsored by bKash's shareholders; Nova Digital Bank, sponsored by VEON, the parent of Banglalink, with Square Group; Boost Digital Bank, sponsored by Axiata, the parent of Robi; and the DK Bank of Bhutan venture.[2] [5] The fifth, Kori Digital Bank, had received its first letter of intent in 2023; the board lifted the suspension of that approval and decided to issue it a fresh letter of intent.[4] [5]

Bangladesh Bank's spokesperson, Arief Hossain Khan, confirmed the decision and said final licences will be issued once all conditions are fulfilled, including raising the required paid-up capital.[3] [5] The Daily Star's Bangla edition described the letter of intent as setting the conditions, including infrastructure, that an applicant must meet before starting operations.[6]

What the reports do not agree on

Press accounts differ on detail, and anyone dealing with these ventures should verify against Bangladesh Bank's own letters. The Bhutanese-backed venture is named DK Digital Bank in some reports, DKB Digital Bank in another and Digital Banking of Bhutan in others.[2] [5] [6] Reported applicant numbers for the second round range from 12 to 14. Some outlets call all five decisions initial approvals; others count four new approvals plus Kori. No report we reviewed states a deadline for meeting the conditions, and we could not obtain the text of any letter of intent.

How digital banks in Bangladesh reached this point

Bangladesh Bank first issued digital bank guidelines on 14 June 2023 and drew 52 applications. Letters of intent went to Nagad and Kori in 2023; Nagad's digital bank received a final licence in June 2024 that was later suspended, and Kori never received one.[9] By August 2025 Kori had not submitted all mandatory documents within six months of its letter of intent.[8]

On 20 August 2025 Bangladesh Bank issued Version 2 of the Guidelines to Establish Digital Bank, raising minimum paid-up capital from Tk 125 crore to Tk 300 crore and tightening sponsor eligibility, including a bar on shell companies and on banks and finance companies operating in Bangladesh.[1] [7] A second round opened on 1 September 2025 and, after an extension, closed on 2 November 2025.[9]

The process stalled under the interim government. A board meeting called at a day's notice on 16 February 2026 drew protests from Bangladesh Bank officers, who alleged it was intended to license one group; the central bank said the board had met to consider pending applications.[9] After the elected government took office, the governor changed and the board took the decision in September 2026 without inviting fresh applications.[2]

The legal framework for digital banks in Bangladesh

A digital bank is a bank. Version 2 of the guidelines requires each one to be a public limited company licensed under section 31 of the Bank Company Act 1991 and to comply with the Payment and Settlement Systems Act 2024. It is subject to the same corporate governance and risk management standards as conventional banks, and the business, governance and operational requirements for traditional banks continue to apply unless the guidelines say otherwise.[1]

The guidelines also give Bangladesh Bank wide discretion. It may modify or add licence conditions under section 31(2), may refuse a licence if not fully satisfied on the matters in section 31(4), may cancel a licence on the grounds in section 31(5), and a digital bank may not undertake any activity unless the guidelines expressly allow it or Bangladesh Bank permits it.[1] For the wider statute, see our guide to the Bank Company Act 1991.

A letter of intent is not a licence

Section 13 of the guidelines sets out the stages. A panel nominated by the Governor evaluates shortlisted applications, and a letter of intent issues to an applicant found eligible. The letter is automatically repealed if the proposed bank fails its conditions or fails to submit the application within the stipulated time; if Bangladesh Bank finds that information was wilfully false or misleading at any stage, the letter is repealed and sponsors face punishment under section 109(2) of the Act.[1] Kori's history shows that time limits attached to a letter of intent are real.

Before launch: capital and sponsor conditions

Capital is the first gate, and the spokesperson singled it out.[5] A digital bank must start with paid-up capital of at least Tk 300 crore, or any higher amount Bangladesh Bank sets under section 13 of the Bank Company Act, consisting only of ordinary shares.[1]

How the money must be paid

Contributions must be in cash and unencumbered, held in a local scheduled bank account, verified and kept under lien in favour of Bangladesh Bank. Sponsors provide the initial minimum capital themselves, from net worth declared to the tax authorities; money borrowed from banks, financial institutions or anyone else, including family members, is not acceptable. Each sponsor must hold at least Tk 50 lakh.[1]

Capital maintenance and personal undertakings

Substantial shareholders must sign a capital maintenance agreement. If capital falls below the minimum requirement at any quarter-end, they must convene an extraordinary general meeting within 30 days and inject capital within 75 days, failing which each may be held individually liable for the shortfall in amounts and timing Bangladesh Bank decides. The required form refers to a capital adequacy ratio above 12.5 per cent of risk-weighted assets or Tk 3,000 million, whichever is higher.[1]

Each sponsor also gives a perpetual, irrevocable undertaking to Bangladesh Bank: to ensure ongoing compliance with capital and liquidity requirements, to discharge personally any outstanding deposit liabilities if the bank is discontinued, to confirm that the funds are not borrowed, and to confirm that no associated person is on the UN Security Council Consolidated List or any other government's sanctions list.[1] That personal deposit-liability undertaking is the single most important document for any institutional investor to review.

Lock-ins and the IPO

Sponsors may not transfer shares within five years of the letter of intent, or within three years of starting business, without Bangladesh Bank's permission, and no permission will be given in the first two years of operation. Each digital bank must make an initial public offering within five years of its licence, of at least the sponsors' initial paid-up capital.[1] Shareholder agreements must be written around both constraints.

Before launch: board and management

Sponsors and directors must pass the fit and proper test in Annex XI: at least ten years of management, business or professional experience, preferably five with app-based banks, e-money issuers, fintech or electronic payments, and a clean record on crime, fraud, regulatory breaches, revoked licences, loan default and bankruptcy, supported by a police clearance certificate.[1] Current loan defaulters, those with pending litigation over default status, shell companies and banks or finance companies operating in Bangladesh are barred as sponsors, and institutional sponsors need at least three years of ongoing business with audited accounts.[1] Dual nationals must disclose every citizenship, including any renounced.

Board composition

The board is formed under section 23 of the Bank Company Act and Bangladesh Bank directives, with family-director limits applied. It should preferably include at least 50 per cent of members with expertise in technology-based banking, emerging technology, cyber law and regulation.[1] See our note on directors' duties in Bangladesh for the general regime.

Senior management

The chief executive must have at least 15 years in banking or fintech, including five in technology-based banking, and that experience is accepted only from institutions with operating profit in the previous five years. The COO, CFO, Chief Information Technology Officer, CISO, Chief Risk Officer and Head of Internal Control and Compliance each need at least five years of technology-based banking experience.[1] Recruiting a full team that meets these thresholds is often the slowest pre-launch task.

Before launch: technology and ICT governance

The technology conditions are where digital banks in Bangladesh differ most from conventional entrants. Version 2 requires robust ICT infrastructure with at least a tier-three data centre and a disaster recovery site in a different seismic zone. Cloud services are allowed, but the cloud must be located within Bangladesh and comply with Bangladesh Bank's Guidelines on Cloud Computing.[1] That is stricter than the general cloud guideline, which allows cross-border hosting of sensitive data in exceptional cases with prior approval.[10]

Standards, audits and certification

The bank must maintain an ICT business continuity plan and ICT risk management plan, comply with the Guidelines on ICT Security Version 4.0 (2023) and the Core Banking Solution Features and Controls guideline Version 2.0 (May 2024), and obtain standard certifications for its applications and infrastructure. Its ICT infrastructure must be audited by an internationally accredited audit firm and the report submitted for licensing, and its cyber security, data privacy and core banking resilience must be audited by an external IT audit firm every year.[1]

Cyber resilience

Bangladesh Bank's Cybersecurity Framework Version 1.0 (2026) requires regulated organisations to recruit a qualified CISO with budget and staff, and to report any critical cyber incident to internal stakeholders and to external stakeholders including BGD e-GOV CIRT and Bangladesh Bank within 72 hours of occurrence.[11] The incident playbook should be tested before launch, not after.

Before launch: outsourcing and partner arrangements

A digital bank may not have its own branches, sub-branches, windows, agents, ATMs or cash machines, and may not offer over-the-counter service. It may instead use conventional banks' networks, mobile financial services and existing ATM, cash deposit and cash recycling machines, subject to Bangladesh Bank regulations.[1] Every one of those relationships is an outsourcing or partnership contract that the regulator will expect to see.

Customer service may be provided through a third party only with Bangladesh Bank's prior approval, and such centres may not handle cash withdrawals or deposits.[1] For cloud and technology providers, the cloud guideline requires fit and proper assessment of the provider and its subcontractors, written contracts covering security and privacy, audit and inspection, sub-contracting, Bangladeshi law, data ownership, termination and exit, review by legal counsel, and audit rights for both the institution and Bangladesh Bank.[10]

For sponsor groups that already run wallets, telecom networks or payment services, the related-party dimension matters: service agreements between the digital bank and its sponsors' businesses must be on arm's-length terms that survive regulatory review. Our guide to PSO, PSP and MFS licensing covers the payment-side licences these partners hold.

Before launch: AML/CFT and KYC

Version 2 makes digital banks subject to the government and Bangladesh Bank prudential regulations on corporate governance, risk management, ICT, cyber security, outsourcing, consumer protection, anti-money laundering and combating the financing of terrorism.[1] At licensing, Bangladesh Bank will review KYC requirements, transaction limits matched to customer profiles, maximum balance limits, minimum technological security and two-factor authentication.[1]

Fresh KYC, not borrowed KYC

The most commercially significant AML rule for sponsor-led ventures is paragraph 9.8: a digital bank must establish each customer relationship by obtaining KYC information afresh, and may not open relationships on the basis of information collected earlier by any other means.[1] A sponsor's existing wallet or subscriber base is a marketing channel, not a ready-made KYC file. Onboarding must instead follow Bangladesh Bank's Guidelines on Electronic Know Your Customer (March 2026), which build on NID and biometric verification against the Election Commission database, with simplified, regular and enhanced e-KYC tiers and digital risk grading.[12]

Policies, a screening system, a compliance officer structure and suspicious transaction reporting to the BFIU should all be in place before the first account opens. Our guide to anti-money laundering law in Bangladesh sets out the statutory duties.

Before launch: data and customer protection

Data rules for digital banks in Bangladesh come from two directions. Version 2 forbids using customer information for any purpose other than the designated business, bars requests for private information that may breach privacy, and requires Bangladesh Bank's prior permission for the purposes and types of information collected. It also requires compliance with the Bankers' Books Evidence Act 2021 and other data protection laws in force.[1]

The main such law is now the Personal Data Protection Act 2026, which is deemed in force from 6 November 2025 for consent, rights, security, retention, five-year records and breach notification, with fines deferred.[13] A digital bank is a strong candidate for designation as a significant data fiduciary. Our data protection law overview explains the regime.

On customer protection, the registered head office must handle complaints physically and digitally, and an automated AI-supported dispute resolution mechanism must always be active for day-to-day transaction disputes, whether or not the customer has raised them.[1]

What a digital bank can and cannot do

The permitted model is narrow. A digital bank may issue virtual cards and QR codes, receive permissible inward remittances, and lend to any sector except foreign trade finance and medium and large industry, using Bangladesh Bank's AI-based alternative credit scoring guidelines and accepting movable property registered in the collateral registry as security.[1] It must be a member of Bangladesh Bank's payment platforms.

Prudentially, it must maintain CRR and SLR, the advance-to-deposit ratio Bangladesh Bank sets, Basel III capital, LCR and NSFR, and participate in deposit insurance; the guidelines cite the Bank Deposit Insurance Act 2000.[1] Parliament passed the Deposit Protection Bill 2026 on 10 April 2026, so applicants should confirm which deposit protection regime and premium rules will apply at launch.[14]

A launch roadmap for approved applicants

The sequence below reflects how we would run the period between letter of intent and licence for digital banks in Bangladesh. Timing will depend on the conditions in each letter.

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Pre-launch requirements at a glance

The table summarises the main conditions and their source. On a phone, scroll it sideways.

What investors and partners must check

Investors in, lenders to and commercial partners of digital banks in Bangladesh should run diligence that goes beyond a standard bank investment.

• Letter of intent terms: obtain the actual letter, its conditions and its deadlines; press reports are not enough.
• Source of funds: sponsor capital must come from tax-declared net worth, not borrowing, which rules out leveraged structures at sponsor level.[1]
• Personal liabilities: the capital maintenance agreement and the deposit-liability undertaking can reach individual sponsors; price and ring-fence them.
• Shareholding limits: the sponsor form contemplates holdings of at least Tk 50 lakh and not exceeding 10 per cent of equity, while the guidelines allow Bank Company Act shareholding caps to be relaxed for digital banks in consultation with the government.[1] Confirm in writing any relaxation a foreign or anchor sponsor relies on.
• Exit and dilution: lock-ins and the five-year IPO obligation shape every exit route and valuation model.
• Data and KYC flows: partner agreements must respect fresh-KYC, purpose limitation and in-country cloud rules, and the Personal Data Protection Act's transfer provisions.
• Foreign exchange: foreign sponsors' capital and future dividends run through Bangladesh's foreign exchange rules; see our guide to foreign exchange regulations in Bangladesh.

Sector risk also deserves a line in the investment paper. When the approvals were announced, bank executives warned that licensing several digital banks at once could add instability, citing the 2012 licensing of nine private banks and non-performing loans above Tk 6.06 trillion.[5] Our banking and finance practice and joint ventures practice advise sponsors and partners on these structures.

Digital banks in Bangladesh: mistakes to avoid

• Treating the letter of intent as a licence: it can lapse automatically, and no customer business is permitted before the section 31 licence.
• Funding capital with debt: borrowed sponsor money, even from family, is prohibited.
• Porting existing customer data: fresh KYC is mandatory and data use needs Bangladesh Bank's prior permission.
• Offshore cloud plans: the cloud must be inside Bangladesh.
• Late senior hires: fit and proper thresholds for the CEO and six other senior roles take time to meet.
• Unapproved outsourcing: third-party customer service needs prior approval, and cloud contracts must carry the mandated terms.
• Ignoring the undertakings: sponsors' capital and deposit-liability commitments are perpetual and personal.

What to watch next

Three markers will show whether the September approvals become working banks. First, publication or disclosure of the letters of intent and their deadlines. Second, the first section 31 licence, which will show how strictly Bangladesh Bank applies the technology and capital tests. Third, whether Bangladesh Bank invites a further round or issues the separate guidelines it had said would follow for digital banking windows inside existing institutions.[8] Until then, no launch date has been confirmed.[9]

For sponsors, investors, fintech partners and service providers, the work starts now: capital mechanics, governance documents, outsourcing contracts and KYC and data architecture all need to be ready for the licensing review. To discuss a mandate, contact TRW.

Frequently asked questions

Which digital banks did Bangladesh Bank approve in September 2026?

On 24 September 2026 the board approved letters of intent for bKash Digital Bank, Nova Digital Bank, Boost Digital Bank and a DK Bank of Bhutan venture, and decided to issue a fresh letter of intent to Kori Digital Bank.[2] [5]

Can the approved digital banks start operating now?

No. They hold letters of intent. Final licences will be issued only once all conditions, including paid-up capital, are met.[3] [5]

What is the minimum capital for a digital bank in Bangladesh?

Tk 300 crore in ordinary shares, paid in cash by sponsors and held under lien in favour of Bangladesh Bank, under Version 2 of the guidelines issued on 20 August 2025.[1]

Which law licenses digital banks?

Section 31 of the Bank Company Act 1991, with compliance also required under the Payment and Settlement Systems Act 2024.[1]

Can a digital bank have branches, agents or ATMs?

No. It may not have branches, sub-branches, windows, agents or its own ATMs, but may use other banks' networks, MFS and existing machines.[1]

Must a digital bank go public?

Yes. It must make an IPO within five years of its licence, of at least the sponsors' initial paid-up capital.[1]

Can a digital bank use offshore cloud?

No. Version 2 allows cloud services only where the cloud is located within Bangladesh.[1]

Can a sponsor's existing wallet customers be onboarded automatically?

No. A digital bank must obtain KYC afresh and cannot open relationships on the basis of information collected earlier by other means.[1]

Can foreign investors sponsor a digital bank?

Yes, as the VEON, Axiata and DK Bank ventures show, subject to fit and proper tests, source-of-funds rules, shareholding limits and foreign exchange regulation.[1] [2]

When will the first digital bank launch?

No date has been announced. Launch depends on each applicant meeting its letter of intent conditions and receiving a section 31 licence.[3]