|Daw Khin Cho
||Daw Thaw Dar
Myanmar's new Financial Institutions Law (FIL) came into
force on January 25 2016. It replaces the Financial
Institutions of Myanmar Law (FIML) of 1990.
The FIML applied to financial institutions including
commercial banks, investment or development banks, finance
companies, and credit societies. It had 91 sections. Rules
under the FIML were published in 1991; regulations were
published in 1992.
Subject to the Central Bank of Myanmar's (CBM) approval,
financial institutions could engage in 16 types of activities
under the FIML. The legislation established Myanmar Economic
Bank (MEB), Myanmar Foreign Trade Bank (MFTB), and Myanmar
Investment and Commercial Bank (MICB).
Initially, only these three banks were permitted to deal in
The new FIL provides for far more comprehensive regulation
of financial sector activities, under the CBM's regulatory
Under the FIL, financial Institutions means banks, non-bank
financial institutions and scheduled institutions. Banks
designates banks licensed by the CBM to carry on banking
business. It includes: commercial banks; development banks; and
licensed branches of a foreign bank.
Non-bank financial institutions (NBFI) means entities
registered under section 20 to carry on one or more of the
- finance company;
- credit token;
- money services;
- other businesses as prescribed by the CBM.
Section 23 of the FIL provides that NBFIs may engage in:
- finance company business;
- leasing business (including hire-purchase);
- factoring business (financing accounts receivable);
- credit card business;
- money services;
- other credit services the CBM may prescribe;
- other activities allowed by the CBM.
Finally, under the FIL, scheduled Institutions means
institutions established under another law that provide
financial services for a specific group. Examples include:
Rural Development Bank; Agricultural Bank; micro-finance
institutions licensed under the Microfinance Law; and credit
An unofficial English translation of the FIL appears on the
CBM's website. It is pending approval from the Office of the
A new era
Before 2011, it is estimated that just one percent of
Myanmar's population had bank accounts. Most people's salaries
were paid in cash. Moreover, it was difficult to access banks
in Myanmar. The legal framework was antiquated and government
sources failed to provide access to the latest rules. There
were few or no computer-based records.
By contrast, in December 2015, the CBM announced a second
round of bidding for branches of foreign banks. On March 4
2016, the Licensing Committee granted preliminary approval to
four foreign banks. These are: BIDV; E.SUN Commercial Bank;
Shinhan Bank; and State Bank of India.
As of March 8 2016 there were 24 private banks, 14 of which
had permission to deal in foreign exchange. In addition, there
were nine branches of foreign banks and 48 representative
offices of foreign banks. ATM machines are now found in many
locations in the country and modern methods of administration
are being introduced in private banks.
Daw Khin Cho Kyi and Daw Thaw Dar Sein