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Myanmar’s Central Bank Issues Notification on Non-Banking Financial Institutions’ Operations

The Central Bank of Myanmar (CBM) has issued Notification 1/2021, setting out regulations on the establishment, operations, and business conduct of non-banking financial institutions (NBFIs). This notification aims to formalize foreign investments in the sector and signal the gradual opening of the industry to international players.

Registration Requirements

Under the new guidelines, NBFIs must register with the CBM and provide a range of documentation, including:

  • Corporate documents
  • Business plans
  • Details on shareholders, directors, and organizational structure

The registration certificate will be issued within six months of receiving the application. The bank may refuse or revoke the certificate if certain conditions are not met.

Conducting Business Activities

NBFIs must also comply with specific requirements for conducting their business activities in Myanmar, including:

  • Restrictions on accepting deposits
  • Engaging in unauthorized activities
  • Using misleading information to obtain registration

Reporting Requirements

NBFIs must also comply with various reporting requirements, including:

  • Submitting periodic reports on lending rates
  • Financial statements audited by an external auditor
  • Senior management must have experience in finance or relevant business
  • Individuals with a history of improper conduct may be barred from serving in senior positions

Consequences for Non-Compliance

Any non-compliance with the notification’s provisions is punishable by administrative penalties, including:

  • Warnings
  • Fines
  • Restrictions on operations
  • Suspension or termination

Impact and Future Directions

The issuance of this notification marks a significant step towards regulating the NBFI sector in Myanmar. While there is no express prohibition on foreign companies operating in the sector, in practice, only 100% local entities have been issued registration certificates. The new guidelines may signal a shift towards opening up the industry to international players, consistent with the liberalization of other financial services in Myanmar.

Contact Information

For more information or assistance on NBFIs in Myanmar, please contact:

  • Thuzar Tin
  • ZICO Law Myanmar partner (the partner you usually deal with)