Financial Crime World

Central Bank Provides Funds to Financial Institutions

The Central Bank has taken a crucial step towards stabilizing the financial sector by providing funds to financial institutions under its administratorship. This move aims to address the financial difficulties faced by certain banks and ensure their smooth operation.

Key Features of the Administratorship

  • The administratorship will cease once the term is over, or if the Central Bank deems that the institution is capable of operating normally.
  • The administratorship will also come to an end in the event of the liquidation of the institution.
  • A condition for the cessation of the administratorship is the repayment or scheduled repayment of funds provided by the Central Bank to the financial institution.

Establishment of State-Owned Financial Institutions

The regulations provide for the establishment of state-owned financial institutions, including:

  • Myanmar Economic Bank
  • Myanmar Foreign Trade Bank
  • Myanmar Investment and Commercial Bank

The Government has the power to establish other financial institutions as well.

Authorized Capital and Initial Subscription

Each bank shall have an authorized capital of one million ordinary shares, with a value of kyats 1,000 each. The number of shares and value of initial capital to be subscribed by the Government for each bank shall be as follows:

  • Myanmar Economic Bank: 140,000 shares worth kyats 140 million
  • Myanmar Foreign Trade Bank: 60,000 shares worth kyats 60 million
  • Myanmar Investment and Commercial Bank: 60,000 shares worth kyats 60 million

Board of Directors

Each bank shall be administered by a Board of Directors, which shall consist of at least seven members. The Board shall be responsible for performing various functions, duties, and powers as specified in the regulations.

Director Appointments

According to Section 66, the Government shall have the power to appoint six directors, including the Chairman, if it owns not less than 50 percent of the share of a bank. If the Government owns less than 50 percent, it shall vote for its shares at the election of members like other shareholders of the bank.

Secretary and Re-appointment

The Board shall also elect a Secretary from among its members. The Chairman and other members shall be eligible for re-appointment for more than one term, provided that they have not been convicted of any offence prescribed by the Ministry of Planning and Finance or adjudged incapable of performing their duties.

Conclusion

In conclusion, the Central Bank’s provision of funds to financial institutions under its administratorship is aimed at stabilizing the financial sector and ensuring the smooth operation of these institutions. The officers and members of these institutions shall be personally liable for any liabilities incurred by the institution, which underscores the importance of responsible management and governance practices.