Minimum capital requirement for digital bank likely Tk500cr

Highlights:

• There will be a head office only, no branches
• Call centres will handle customers’ issues  
• All banking services will be completely online
• Operations likely to be extended in three stages
• Deposits, withdrawals, small loans and fund transfers in 1st stage

The minimum capital requirement for a digital bank could be Tk500 crore, while the licensing would be under the Bank Company Act, according to the primary regulatory guidelines of the central bank. 

Bank Asia and mobile financial services provider Nagad have recently sought permissions from the Bangladesh Bank for setting up digital banks. Besides, a number of mobile financial services providers have shown interest in launching digital banks, according to Bangladesh Bank sources, persuading the central bank to formulate the guidelines. Finance Minister AHM Mustafa Kamal also in his FY2022-23 budget speech mentioned launching digital banks to widening and accelerating financial inclusion. He said the banks would also create new jobs for young IT workers. Digital Bank, also known as Neobank, an internet-only bank or virtual bank, is a type of direct bank that operates exclusively online without traditional physical branch networks. “The banks will have only head offices and mainly provide banking services through websites and mobile phone apps,” a senior central bank official told The Business Standard, adding “The new banks will have call centres for the customers. When fully operational, digital banks will be able to transact large sums just like conventional banks. Referring to digital banks in foreign countries, a senior central bank official said once a digital bank is approved, its operations are usually extended in three phases.

“In the first stage, the banks are allowed retail banking. The banks deal with customer deposits and withdrawals, small loans and fund transfers. If they can do these things successfully, they are allowed to go to the second phase.” The second phase incorporates lending to SMEs, while digital banks deal with corporate lending in the third phase. The banks in this stage, according to the official, receive export payments, settle import bills and go for big lending. In their proposal, the committee suggested that the country should proceed step by step like other countries, but can drop the second phase. Most members of the committee voted for the first phase to be for at least 2-3 years.

Source: https://www.tbsnews.net/economy/banking/minimum-capital-requirement-digital-bank-likely-tk500cr-438062

Corporate tax cut: Berger, Marico, United Power may miss benefit

The government has proposed a 2.5 percentage point cut in corporate tax rates for the listed companies in the national budget unveiled for the next fiscal year in a bid to develop the stock market and attract investments. This brings down the corporate tax rate to 20 per cent from 22.5 per cent for the publicly-traded firms that have issued shares worth more than 10 per cent of their paid-up capital through initial public offerings (IPOs). For the listed companies that have offloaded equities worth 10 per cent or fewer, the rate has been kept unchanged at 22.5 per cent.

However, the listed companies, whether shares equivalent to more than 10 per cent of their paid-up capital are offloaded or not, must carry out all receipts and incomes as well as all expenses and investments of more than Tk 12 lakh through bank transfer to qualify for the 2.5 percentage point cut in the corporate tax rate. Industry people have welcomed the budgetary proposal.

“The tax rate cut for the listed companies will have a positive impact on the market,” said Mir Ariful Islam, managing director of Sandhani Life Insurance Asset Management Company. Mohammad Emran Hasan, chief executive officer of Shanta Asset Management, said the reduction in the corporate tax would directly raise the net profits of the listed companies. However, Berger Paints, United Power Generation and Marico Bangladesh, are likely to miss out on the benefit since they have offloaded 10 per cent or fewer shares.

Source: https://www.thedailystar.net/business/economy/industries/tax-customes/news/berger-marico-united-power-may-miss-out-benefit-3045156