On 31 December 2020, Bank Negara Malaysia ("BNM") issued the Licensing Framework for Digital Banks policy document ("Licensing Framework"), together with a set of Frequently Asked Questions. The Licensing Framework has been developed for digital banks to provide banking products and services to the underserved or unserved market, wholly or almost wholly through digital or electronic means.
The Licensing Framework sets out, amongst others, (i) the eligibility requirements and application procedures for applicants; and (ii) the business limitations, regulatory requirements, and business activities that must be undertaken by digital banks. To enable the admission of digital banks with strong value propositions without compromising the integrity and stability of the financial system and depositors' interests, BNM has imposed certain safeguards on the initial operations of digital banks such as requiring licensed digital banks to operate with an asset limit for the first three to five years of operations.
The Licensing Framework came into effect immediately upon issuance, and interested applicants have until 30 June 2021 to submit the licence applications. BNM targets to notify successful applicants (limited to five licences in the initial rollout) in the first quarter of 2022.
