The FinTech landscape in Bangladesh is growing rapidly, offering innovative solutions in digital payments, lending, personal finance, and more. However, with growth comes the responsibility of operating within a well-defined regulatory framework. For startups looking to enter or expand in this space, understanding the regulatory environment is not just important — it’s essential.
1. Regulatory Authorities You Must Know
The primary regulatory body for FinTechs in Bangladesh is Bangladesh Bank (BB). It oversees payment systems, mobile financial services (MFS), digital banks, and alternative credit scoring mechanisms. In addition, Bangladesh Securities and Exchange Commission (BSEC) plays a role when FinTechs deal with digital assets, investments, or capital markets. For data protection and digital services, the Digital Security Act 2018 and ICT Act also come into play.
2. Licensing and Approval Requirements
Startups offering payment services must register as a Payment Service Provider (PSP) or Payment System Operator (PSO) with Bangladesh Bank. MFS providers must partner with a licensed bank, as standalone MFS licenses are not currently issued to non-banking entities. FinTechs engaging in lending or credit scoring must ensure alignment with BB’s credit information policies and may require partnerships with NBFIs or banks to operate legally.
3. Digital Bank Guidelines
In 2023, Bangladesh Bank introduced a guideline for establishing Digital Banks. Startups with strong tech foundations and access to capital can apply, provided they meet the minimum capital requirement of BDT 125 crore and demonstrate strong governance, cybersecurity, and financial inclusion strategies. This move opens up new possibilities but requires rigorous compliance.
4. Data Privacy and Cybersecurity Compliance
FinTechs deal with sensitive financial and personal data, so compliance with data security and anti-money laundering (AML) standards is critical. Bangladesh Financial Intelligence Unit (BFIU) guidelines must be followed for AML/CFT compliance. Cybersecurity frameworks aligned with Bangladesh Bank’s directives are also a must for gaining trust and regulatory approval.
5. Challenges Startups Face
One major challenge is the absence of a unified FinTech law. Startups often navigate a complex web of banking, digital security, and financial laws. Regulatory sandboxes or clearer startup-specific policies would go a long way in fostering innovation while ensuring compliance. There’s also a gap in awareness — many early-stage founders are not fully informed about the licenses or reporting obligations they need to fulfill.
Final Thoughts
Regulatory compliance might seem daunting, but it is a cornerstone of long-term success in Bangladesh’s FinTech ecosystem. Engaging early with regulators, seeking legal counsel, and staying updated on evolving policies can help startups avoid costly mistakes and build user trust. As Bangladesh moves towards a smarter digital economy, the FinTechs that balance innovation with responsibility will lead the way.