Financial Crime World

Myanmar Banking Sector Set for Transformation by 2025

The Myanmar banking sector is on the cusp of significant transformation over the next five years, with various critical initiatives set to be implemented in the short- to medium-term. A recent report highlights the need for key reforms and regulatory adjustments to unlock the sector’s full potential.

Challenges Facing the Banking Sector

The country’s banking sector requires a number of key reforms and regulatory adjustments to achieve its full potential. Specifically, it needs to:

  • Mobilize domestic savings
  • Channel those savings through credit to their most efficient use in the economy
  • Provide safe, fast, and reliable means of making payments

Progress Made, But More Work Needed

While significant progress has been made in recent years, including the development of a fully functional Real Time Gross Settlement (RTGS) System and the introduction of standardized T-Bill auctions, much remains to be done. The interbank market, in particular, is essential for any banking sector and is still developing in Myanmar.

Addressing the Interbank Market

To address this issue, the Central Bank of Myanmar (CBM) has issued new directives encouraging interbank lending and borrowing in Kyat, relaxing collateral conditions, and promoting free rate setting in that market. Additionally, the CBM has given preliminary approval to 13 foreign banks to operate in the country.

Initiatives for Future Development

The following initiatives are set to be implemented over the next five years:

  • Strengthening Risk Management Policies and Practices: Improving risk management processes to ensure the stability of the banking sector.
  • Improving Credit Decision-Making Processes: Enhancing credit decision-making processes to increase access to financial services for underbanked populations.
  • Enhancing Transparency and Governance Structures: Strengthening transparency and governance structures to promote trust in the banking sector.
  • Developing a More Efficient and Inclusive Payment System: Developing a more efficient and inclusive payment system to facilitate economic growth.
  • Increasing Access to Financial Services for Underbanked Populations: Increasing access to financial services for underbanked populations, including rural and marginalized communities.

Key Players

The following banks have received preliminary approval from the CBM:

  • Oversea-Chinese Banking Corporation
  • Bank of Tokyo-Mitsubishi UFJ
  • Sumitomo Mitsui Banking Corporation
  • United Overseas Bank
  • Industrial and Commercial Bank of China
  • Bangkok Bank Public Company
  • Maybank
  • Bank for Investment and Development of Vietnam
  • Mizuho Bank
  • Shinhan Bank
  • State Bank of India
  • ANZ
  • E. SUN Commercial Bank

Conclusion

The Myanmar banking sector has made significant progress in recent years, but these initiatives are crucial for ensuring its continued growth and development. By 2025, the sector is expected to be more efficient, inclusive, and modern, providing a stronger foundation for the country’s overall economic development.