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Reforming Myanmar’s Banking Sector: Progress and Challenges

Myanmar’s banking sector has undergone significant reforms in recent years, but challenges remain. This article highlights the progress made and the obstacles that still need to be addressed.

Challenges in Myanmar’s Banking Sector

Limited Access to Banking Services

• Many citizens do not have bank accounts.
• A cash-based economy until recently, with most transactions made in cash.

Manual Payment Clearing

• Checks and bank transfers often involved manual processing.

Progress in Reforming the Banking Sector

Automated Clearance System (CBM-Net)

• Implemented by the Central Bank of Myanmar with Japanese International Cooperation Agency support.
• Enables faster and more efficient clearing of payments.

Real-time Gross Settlement (RTGS) System

• Enables large transactions between banks to be settled in real-time.
• Facilitates faster and more secure transactions.

Electronic Payment Infrastructure

• Government passed the Financial Institutions Law to empower the Central Bank of Myanmar to regulate electronic payments.
• Lays the foundation for a robust electronic payment system.

Retail Banking Progress

Increased Use of ATMs and POS Terminals

• Over 1,700 ATMs and 2,800 POS terminals by early 2016.
• Provides citizens with greater access to banking services.

Debit and Credit Cards

• Myanmar Payment Union (MPU) has implemented a national payment switch.
• Issued 1.1 million debit cards between 2012 and 2015.

Challenges Remaining

Limited Electronic Payments

• Most banks still operate with a mix of ad hoc electronic and cash-based systems.
• Inhibits the growth of electronic payments.

SWIFT Code Implementation

• About a quarter of banks do not have a SWIFT code.
• Hinders international transactions and financial inclusion.

Credit Bureau Establishment

• Myanmar has not established a credit bureau.
• Essential for credit assessment and financial inclusion.