“More foreign bank branches will be allowed next year. Foreign banks can no longer be blocked from doing business in Myanmar because the local banks are not developed or ready yet. We need to focus on building up the financial sector as a whole,” said CBM vice governor U Soe Thein.

U Soe Thein and his colleague, deputy governor U Bo Bo Nge, were addressing the media in Yangon following a November 8 CBM directive permitting foreign banks to lend to local businesses. In the past, foreign banks were only allowed to lend to foreign enterprises in foreign currencies.

“Foreign banks will be able to provide financing to domestic firms in Myanmar kyats as well as in foreign currencies. They will also be given permission to provide the full suite of trade-financing services,” U Bo Bo Nge said.

U Soe Thein added that “the interest rate for loans in foreign currenciesis not fixed and can be made based on the market rate. Meanwhile, kyat loans will be permitted if rates do not exceed the maximum bank lending rate of 13 percent for domestic banks.”

However, foreign bank branches will not be allowed to accept immovable property such as land and buildings as collateral.

They are also not allowed to offer retail banking services such as personal savings accounts, money transfers and card services.

“In terms of kyat, foreign banks are not allowed to accept fixed deposits but they can if the funds are in foreign currency. However, we have not made a decision on whether to allow interest on foreign currency accounts,” U Soe Thein said.

“The approvals granted so far have been given after taking the local banks into consideration as they still have to meet our capital requirements,” he said.

There are currently 13 foreign bank branches in Myanmar as well as 25 local private banks and four government banks allowed to operate in Myanmar’s banking and finance sector.

Source: https://www.mmtimes.com/news/central-bank-provides-new-details-foreign-bank-directive.html