Myanmar Is Opening Its Banking Sector

After years of military rule, sanctions imposed on the junta and the subsequent ruling fraternity, and devastating economy, Myanmar is gradually progressing on a road to recovery. So are its banking institutions.

Myanmar, which came out of the military regime and years of uncertainty subsequent to that, is today witnessing a rapid transformation and a better engagement with globalization. The political reforms implemented over the last several years have brought in changes in all spheres, especially so in the financial services domain. Now in the very early stages of financial reforms, the country continues to remain a cash-oriented economy. It has seen high inflation, bank collapses and insider lending, which have all created public distrust in the banking and financial system. Even now, just less than 10% of the citizens have bank accounts. There is a huge informal banking system in prevalence and foreign exchange is mostly traded in the alternative market.

The Central Bank of Myanmar (CBM) is the regulator, which was set up through a 1990 legislation. The country’s banking system comprises state-owned banks, domestic private banks and foreign banks, most of the latter having representative offices. The central bank had prescribed that foreign banks will be allowed to enter the country in three phases - in the first phase it will be joint ventures with local banks, in the second there will be locally incorporated 100% foreign owned subsidiaries and in the third phase there will be branches of these banks.

BANKING SYSTEM