Financial Crime World

Myanmar’s Central Bank Issues New Notification for Non-Banking Financial Institutions

Yangon, Myanmar - A New Era of Regulation for NBFIs

The Central Bank of Myanmar (CBM) has published Notification 1/2021, which takes immediate effect and has significant implications for non-banking financial institutions (NBFIs) operating in the country. The notification outlines new requirements for NBFIs engaging in finance company business, leasing business, or factoring business.

Key Provisions

  • Registration Requirements: NBFIs must register with the CBM by submitting specified documents to conduct any of these businesses.
  • Certificate Terms and Conditions: The registration certificate may come with terms and conditions prescribed by the CBM on a case-by-case basis, which could include minimum capital requirements.
  • Penalties for Non-Compliance: Trading as an NBFI without a valid CBM certificate is punishable by imprisonment for two to five years and a fine of MMK 500 million (approximately USD 375,000).
  • Revocation Powers: The CBM has extensive powers to revoke the NBFI certificate in certain circumstances, including failure to comply with terms and conditions, conducting non-NBFI business, or engaging in activities detrimental to consumers.
  • Deposit Prohibition: NBFIs are prohibited from accepting deposits, which is defined as a sum of money paid on terms under which it will be repaid or is repayable, either wholly or in part, with any consideration.

Foreign Ownership

The notification also addresses foreign ownership, implying that 100% foreign-owned NBFIs may be permitted. While the CBM has yet to confirm this, industry insiders speculate that foreign investment may be allowed on a case-by-case basis.

Additional Provisions

  • Interest Rates: The notification sets out requirements for interest rates.
  • Fit and Proper Requirements: Senior management must meet fit and proper requirements.
  • Financial Reporting: NBFIs are required to submit financial reports to the CBM.
  • Inspection by the CBM: The CBM has the right to inspect NBFIs.

Conclusion

The new notification sets out a clear framework for NBFIs operating in Myanmar. It is essential that NBFIs familiarize themselves with the requirements and take immediate action to comply.

For more information, please contact Ross Taylor at Tilleke & Gibbins.