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Myanmar: Regulating financial institutions

Myanmar’s new Financial Institutions Law (FIL) came into force on January 25 2016

Daw Khin Cho KyiDaw Thaw Dar Sein

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 foreign exchange.


The new FIL provides for far more comprehensive regulation of financial sector activities, under the CBM's regulatory authority.

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 following businesses:

  • finance company;
  • leasing;
  • factoring;
  • 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 securities.

An unofficial English translation of the FIL appears on the CBM's website. It is pending approval from the Office of the Attorney General.

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

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