MYANMAR’S CENTRAL BANK ISSUES GUIDELINES FOR BANKS TO ENHANCE RISK MANAGEMENT PRACTICES
A Step Towards Strengthening Myanmar’s Financial System
YANGON, MYANMAR - The Central Bank of Myanmar (CBM) has released the “Guideline on Risk Management Practices of Banks” to enhance the country’s financial system. This move aims to ensure that banks have a robust risk management framework in place, taking into account their business nature, scale, and complexity.
Key Objectives of the Guidelines
- Ensure that banks have an appropriate risk management system
- Enhance supervisory expectations for banks to follow
- Improve the resilience of Myanmar’s financial system
- Promote a culture of risk management and sound governance practices
Guidelines at a Glance
The guidelines set out supervisory expectations for banks, including:
- Risk Governance Framework: Banks must establish a clear risk governance framework with roles and responsibilities.
- Senior Management Responsibility: Senior management is responsible for implementing the risk management system.
- Independent Risk Management Function: An independent risk management function should be established to oversee the management of risks inherent in the bank’s activities.
- Comprehensive Risk Strategy and Risk Appetite Framework: Banks must have a comprehensive risk strategy and risk appetite framework in place.
- Key Financial Risks Management: Banks must manage key financial risks, including credit risk, market risk, liquidity risk, operational risk, legal and regulatory risk, strategic risk, and group and related parties risk.
Failure to Comply
Failure to comply with the guidelines constitutes a violation and may result in corrective actions or sanctions under the Financial Institutions Law (FIL).
The CBM’s move is expected to have a positive impact on Myanmar’s banking sector, promoting sound governance practices and enhancing investor confidence.