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CHAPTER VIII Relations with Financial Institutions

57. The Central Bank shall be responsible for licensing, inspecting, supervising and regulating financial institutions, and may give such directions as may be necessary to ensure the solvency and soundness of such institutions.

58. The Central Bank may, from time to time require banks and financial institutions to maintain required reserves and specified liquid assets, against such deposits and similar liabilities in the following manner: —
(a) required reserves shall be maintained by way of cash holdings, or by way of deposits with the Central Bank, or by both, in such proportion as the Central Bank may from time to time determine;
(b) liquid assets shall consist of freely transferable assets, free from any charge or lien, and of the kind and amount specified by the Central Bank.
59. The Central Bank may set different liquidity and reserve ratios for different types of deposits and similar liabilities and may also determine the method of their computation. Provided that the required ratios and the method of computation shall be uniform for all institutions within the same class.

60. The Central Bank may impose on and collect from any bank or financial institution which fails to maintain required reserves or specified liquid assets in the appropriate ratio determined in accordance with section 58 and section 59, a levy, not exceeding one-fifth of one per centum per day on the shortfall of liquid assets or required reserves in such bank or financial institution, as the case may be, until the shortfall is corrected.

61. The Central Bank may prescribe the following in respect of a class of financial institutions or all financial institutions: —
(a) minimum interest rates payable in respect of any category of deposits or similar liabilities and the computation methods;
(b) the permitted uses, applicable ratios,maximum aggregate limits,maximum amounts to be exceeded only with the Central Bank’s approval, the required guarantees, maximum maturities, and maximum rates of interest chargeable in respect of the following operations: —
(i) making different categories of advances in the form of loans or overdrafts, and different categories of investments;
(ii) discounting any type of bill of exchange, promissory note or other commercial, industrial, agricultural or financial bills of exchange and promissory notes;
(iii) accepting liabilities and granting any other type of loans and advances;
(c) determination of applicable ratios in the following manner: —
(i) in general, the composition of and ratios between asset and liability items, namely of own capital and deposits to other liabilities on account of acceptances and guarantees given;
(ii) in particular, the composition of and ratios between the items under clause (i), namely of own capital to certain types of permitted operations, such as the underwriting of shares, bonds, or public debt bonds, the acquisition of shares or bonds issued by commercial institutions, and the granting of credit to a single entity or enterprise;
(d) the minimum and maximum commissions, service charges and other fees which may be levied on any type of transactions which financial institutions may enter into with the public or with other financial institutions;
(e) the minimum cash margins for the opening of letters of credit by banks.

62. Any action taken by the Central Bank under section 61 shall be applicable uniformly to all financial institutions of a particular type without discrimination, and no action taken under section 61 shall have retrospective effect.

63. If the Central Bank considers that in the operation of any person there is an excessive extension of credit or acceptance of deposits from the public, it may, with the approval of the Government inform such person by written notice to comply with any provision of section 61.

64. If the Central Bank considers that it is necessary to take action under the provision of section 61 due to the occurrence of circumstances mentioned in section 63 or if there are reasons to believe that any person is extending or has extended credit or is accepting or has accepted deposits, the Central Bank may call for and examine the accounts, books and records of such person.

65. Any person or financial institution which fails to comply with the stipulations of a notice issued by the Central Bank shall be subject to penalty under the provisions of this Law or under any other laws relating to financial institutions.

66. Required reserves for a bank shall not exceed 35 per cent of the total liabilities of the bank. Provided that if the Board considers that there are serious inflationary pressures, it may increase required reserves above the maximum 35 per cent limit. In such a case, the Central Bank shall pay interest on the required reserves exceeding the 35 per cent limit. Provided that such rate of interest shall not exceed the minimum discount rate prevailing in the Central Bank.

67. Changes in minimum reserve requirements shall become effective from the date determined by the Central Bank. Provided that such date shall not be earlier than 14 days from the publication of a declaration by the Central Bank.
68. (a) Financial institutions shall furnish to the Central Bank at such intervals and in such manner as may be prescribed, such information as the Central Bank may determine it requires for the effective discharge of its functions and responsibilities;
(b) The Central Bank may publish in consolidated form and at such intervals as it considers appropriate all or part of the information furnished under sub-section (a). Provided that information concerning any individual and not relating to the public shall not be published.

69. The Central Bank may open accounts for, and accept deposits from financial institutions in accordance with such terms and conditions as it may from time to time determine.

70. The Central Bank may, on such terms and conditions as the board may from time to time determine purchase from, sell to, discount and rediscount the following for the account holders referred in section 69: —
(a) bills of exchange and promissory notes drawn or made for commercial, industrial or agricultural purposes, bearing two or more endorsements of which at lease one shall be that of a bank, and maturing within 184 days from date of their acquisition by the Central Bank;
(b) treasury bills issued to the public or other securities issued or granted by the Government;
(c) financial instruments issued by the Central Bank.

71. The Central Bank may, on such terms and conditions as it may from time to time determine persons who have opened accounts at the Central Bank advances for periods not exceeding 92 days in the following manner: —
(a) advances secured by the following: —
(i) instruments mentioned in section 70 sub-section (a), (b), or (c);
(ii) warehouse receipts and other documents of title issued in respect of goods duly insured;
(iii) holdings of any assets which the Central Bank is permitted to buy, sell, or deal in under this Law;
(b) unsecured or secured by such other assets on such terms and conditions as it shall determine when it considers that such an advance is needed in exceptional circumstances, in order to meet the liquidity requirements of the borrower and to serve the public interest.

72. The Central Bank shall extend credit only to head offices of financial institutions incorporated in the State and to the main office in the State of branches of foreign financial institutions.

73. The Central Bank shall determine and declare from time to time its rates for discounts, rediscounts, and rates of interest on advances, and may determine differential rates and ceilings for various types of transactions or maturities, or for any class of financial institutions.

74. The Central Bank may, in cooperation with financial institutions, make arrangements for the clearing of cheques and other instruments used as means of payment.
 

Date : 22th Nov 2017

 

1366.0 / USD

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Source : forex.cbm.gov.mm

Interest Rate(%)
Central Bank Rate 10% pa
Minimum Bank Deposit Rate 8%pa
Maximum Bank Lending Rate 13%pa
Economic Indicators (%)
GDP Growth 5.90 %
Annual Rate of Inflation 4.66 %
Year on Year Inflation 3.40 %

     Source : Ministry of Planning and Finance