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The Central Bank of Myanmar ("CBM") recently issued Notification No. 6/2018 dated 8 November 2018 ("Notification") giving all branches of foreign banks the right to provide financing and other banking services to local businesses.
This directive seeks to address the issues that local companies traditionally face when trying to secure financial assistance from branches of foreign banks operating in Myanmar. Prior to the Notification, foreign banks were limited to lending only to foreign entities in foreign currencies. With the Notification, these branches of foreign banks are now allowed to provide financing to domestic companies in both local and foreign currencies. Foreign bank branches are also permitted to set their own rates for foreign currency loans, which must be in line with market rates.
However, foreign bank branches will not be allowed to accept immovable property as collateral. They are also not allowed to offer retail banking services such as personal savings accounts, money transfers and card services.
Businesses welcomed the move, which came after CBM allowed foreign banks to provide export financing in December 2017, followed by banking services related to the provision of export financing in the early part of 2018.
Currently, there are 13 foreign bank branches in Myanmar as well as 25 local private banks and 4 government banks that are allowed to operate in Myanmar's banking and finance sector.
Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only
intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.
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Rajah & Tann Myanmar Company Limited Room No. 408(A), Prime Hill Business Square, No. 60, Shwe Dagon Pagoda Road, Dagon Township, Yangon, Myanmar http://mm.rajahtannasia.com
Contacts: Dr Min TheinManaging PartnerD +951 9345343F +951 9345348min.thein@rajahtann.comChester TohDirectorD +65 62320220chester.toh@rajahtann.comJainil Bhandari DirectorD +65 62320601jainil.bhandari@rajahtann.comRajah & Tann Asia is a network of legal practices based in Asia. | Member firms are independently constituted and regulated in accordance with relevant local legal requirements. Services provided by a member firm are governed by the terms of engagement between the member firm and the client. | This update is solely intended to provide general information and does not provide any advice or create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on this update. |
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