The Central Bank of Myanmar (CBM) has released new regulations covering the establishment, operations and business conduct of non-bank financial institutions (NBFI) in the country.
“The directives are intended to regulate NBFIs and ensure they operate systematically within the scope of the Central Bank, including setting interest rates. They are meant to control their activities,” said CBM Vice Governor U Soe Min.
Notification 1/2021 will apply to legal entities formed with the intention of establishing an NBFI and any NBFI engaging financing, leasing and factoring activities.
These firms must apply for a registration certificate from the CBM in order to operate in Myanmar. The notification listed the documents required to apply, including evidence that the applicant is a company incorporated under the Myanmar Companies Law and information evidencing the source of funds for paid-up capital.
The notification also included a list of circumstances under which the CBM may revoke the registration certificate. These include failing to commence activities within twelve months from the date of receipt of the registration certificate and conducting activities other than NBFI business activities.
NBFIs should also display clearly on a daily basis at its head office and branches the interest rates, default interest rates, fees and commissions related to loans provided.
Interest payments will be computed based on the total principal amount outstanding for each payment period during the term of the loan.
An NBFI is now also required to submit periodic reports on its lending rates to the CBM as well as a copy of its financial statements audited by an external auditor to the CBM within three months of the end of the financial year, according to Notification 1/2021.
Of the 28 NBFI licenses issued by the CBM since 2016, two have been revoked. First Collaborative Finance Co Ltd had its license revoked in August 2020 for not commencing operations within a year.
In December, the CBM revoked the license of Z Corporation Co Ltd due to the lac of transactions, inappropriate business structure, weak accounting processes and failure to address these concerns despite the firm having received numerous warnings from the Central Bank. - Translated
