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Bank Accounts for Foreign Investors: A Guide to Trading in Shares of YSX-Listed Companies

In a move to attract foreign investment, the Central Bank of Myanmar (CBM) has issued Directive 3/2020 to guide authorized dealer banks on transactions related to trading of shares by foreign investors in Yangon Stock Exchange (YSX)-listed companies.

Bank Accounts for Foreign Investors

Authorized dealer banks are allowed to open three types of bank accounts for foreign investors:

• Resident Kyat Account for Securities: For transactions involving the purchase and sale of securities.
• Non-Resident Kyat Account for Securities: For transactions related to the transfer of funds in kyats.
• Non-Resident Foreign Currency Account for Securities: For transactions involving the transfer of foreign currency.

These accounts can only be used by foreign investors for transactions related to trading shares in YSX-listed companies.

Obligations of Foreign Investors

Foreign investors are required to:

• Apply for and obtain relevant approvals prior to opening any of these bank accounts.
• Inform the CBM when bringing funds into Myanmar to purchase shares of YSX-listed companies.
• Submit projected repatriation plans.

New Guidelines for Non-Banking Financial Institutions

The CBM has issued new guidelines for non-banking financial institutions (NBFI) to ensure greater transparency in their lending practices. These guidelines require:

• NBFI loan agreements to clearly specify the loan amount, annual interest rate, and repayment schedule.
• Clear disclosure of commission fees or other charges.

Guidelines on Risk Management Practices of Banks

The CBM has also issued new guidelines for banks to strengthen their risk management practices. These guidelines require:

• Establishing adequate risk management systems.
• Appointing a chief risk management officer.
• Maintaining records of risk decisions taken by the bank.

Implications for Non-Compliance

Banks that fail to comply with these guidelines may be subject to:

• Sanctions
• Corrective actions
• Administrative penalties under the Financial Institutions Law, 2016

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