Bangladesh approves five digital banks as bad loans hit a third of all lending
Bangladesh's central bank has given initial approval to five digital banks in a market where roughly one-third of outstanding loans are classified as bad. The Bangladesh Bank named bKash Digital Bank, Boost Digital Bank backed by Robi Axiata, Nova Digital Bank backed by VEON and Square, DK Digital Bank and Kori Digital Bank, according to Token Times. None holds a final licence yet: each must build its infrastructure, prove operational readiness and meet regulatory conditions before taking deposits or lending.
The approvals land in a crowded field. About 61 scheduled banks already serve more than 180 million people, and central bank data put classified loans at around Tk 6.07 trillion in June, pressuring capital, profitability and the capacity to finance new activity. Former Bangladesh Bank governor Ahsan H Mansur argued in January that the country had more banks than it needed and called for consolidation. Traditional lenders have also spent heavily on digital channels: the central bank's Financial Stability Report 2025 says every branch had online banking capability by December 2025, while mobile financial services such as bKash have built large ecosystems of their own.
That leaves the newcomers needing a product the incumbents do not offer. Without branch networks or over-the-counter operations, they can run on a different cost base and pass savings to customers, but cheaper operations alone will not win accounts. The case sharpens if they deliver instant credit decisions, analytical tools, personalised products and faster service. The clearest opening is SME finance, where entrepreneurs often lack the collateral, financial records and banking history that conventional lenders demand. Digital sales, payments, invoices and account activity could give lenders an alternative view of creditworthiness.
The risk runs alongside the opportunity. Lending on weak credit analytics, thin scoring models or ineffective collections could seed a new generation of bad loans in a sector already carrying a third of its book as classified. Regulators will also shape how success is judged. Account openings, app downloads and transaction counts say little; the measures that matter are how many underserved people enter formal banking, how much productive credit reaches SMEs and agriculture, and how well fraud and cyber risk are controlled. The test for the five is whether technology and alternative credit assessment reach borrowers that brick-and-mortar banks have long struggled to serve.
