Myanmar Commission Issues New Directives for Banks and Foreign Investors

Regulating Banking Sector and Facilitating Foreign Investment

YANGON, MYANMAR - The Central Bank of Myanmar (CBM) has issued a series of directives aimed at regulating the country’s banking sector and facilitating foreign investment.

New Account Types for Foreign Investors

• AD banks are now allowed to open three types of bank accounts for foreign investors:
  • Resident Kyat Account for Securities (R-KAS)
  • Non-Resident Kyat Account for Securities (N-KAS)
  • Non-Resident Foreign Currency Account for Securities (N-FAS)
• These accounts can only be used for transactions related to trading shares in Yangon Stock Exchange-listed companies.
• Foreign investors are required to apply for and obtain relevant approvals before opening any of these bank accounts.
• They must also inform the CBM when bringing funds into Myanmar to purchase shares and submit a projected repatriation plan to the Central Bank.

Relaxation of Banking Requirements

• The CBM has reduced the minimum cash reserve requirement (MCR) for banks from 5% to 3.5%.
• Initially set to last six months, the reduction was later extended by another six months.
• The CBM has also revised the calculation of liquidity ratios for banks, allowing them to count treasury bonds with a term of one year or more at 90% instead of 50%.

Prohibition on Digital Currencies

• The CBM has prohibited financial institutions from accepting or facilitating transactions involving digital currencies.
• The use of digital currency is not recognized as official currency in Myanmar.

Risk Management Guidelines for Banks

• The CBM has issued guidelines on risk management practices for banks, which include requirements such as:
  • Setting up adequate risk management systems
  • Approving risk management policies
  • Implementing internal controls
• Banks that fail to comply with these guidelines may be subject to sanctions or corrective actions.

Efforts to Promote Foreign Investment

The directives are part of efforts by the government to promote foreign investment and attract more international capital into the country.