Myanmar Central Bank Issues New Regulations for Banks and Financial Institutions
In a move to strengthen the country’s financial sector, the Myanmar Central Bank has issued new regulations governing the activities of banks and financial institutions. The regulations aim to ensure stability, transparency, and fair competition in the industry.
Prohibitions on Non-Core Business Activities
- No Wholesale or Retail Trade for Banks: The new regulations prohibit banks from engaging in wholesale or retail trade, including import and export trade, unless it is done to satisfy debts due to the bank or for the purpose of purchasing or selling gold or foreign currency.
- Restrictions on Acquiring Immovable Property: The regulations impose restrictions on banks acquiring immovable property, which must not exceed a certain percentage of the bank’s capital funds. The acquisition of immovable property must be for the purpose of conducting banking business or providing housing or amenities for staff, or as security for a debt.
Risk Management and Capital Adequacy
- Financial Exposure Limits: The regulations set limits on banks’ financial exposure to individual counterparties, which cannot exceed 20% of the bank’s core capital. This move is aimed at preventing excessive risk-taking by banks and ensuring their stability.
- Shareholdings and Business Activities: The regulations prohibit banks from acquiring or holding shares in companies that are not public companies or carry on ineligible business activities. Banks are also restricted from acquiring shares in excess of 10% of their unimpaired capital funds.
Other Regulations
- Prior Written Consent Required: The new regulations require banks to obtain prior written consent from the Central Bank before establishing subsidiaries, opening offices, or engaging in contracts or agreements that could secure dominance in financial markets.
- Advertising and Licensing Restrictions: Banks are prohibited from making false or misleading advertisements and must not transfer their licenses to other persons. The regulations also impose restrictions on foreign banks operating in Myanmar.
Penalties for Non-Compliance
- Fines and Revocation of Licenses: The regulations provide for penalties for non-compliance with the rules, including fines and even revocation of licenses.
The new regulations are aimed at strengthening the country’s financial sector and ensuring stability and transparency in banking and financial activities. They will come into effect from [date] and all banks and financial institutions are required to comply with them.