In the most recent update on the Myanmar banking sector, the Central Bank of Myanmar (“CBM”) announced amended and increased lending rates through the issuing of Directive 1/2019 (“Directive”) on 15 January 2019. The changes in this Directive will take effect from 1 February 2019.
Under this Directive, 13% will be the highest lending rate that banks can fix for loans backed by collateral such as “land and buildings, gold and gold products, diamond and precious stones, saving certificates, government treasury bonds, fixed deposits (part-time deposit accounts), securities, negotiable instruments, pledges, and credit guarantee including loans issued subject to the types of mortgages prescribed by the CBM from time to time.”
For loans without collateral the highest lending rate will be 16%. The Directive also indicates that the prevailing Central Bank Rate will be 10% while the minimum bank rate for deposits will be capped at 8%.
These rates will apply to Myanmar banks and foreign bank branches licensed to operate in Myanmar.
The highest lending rate as mentioned in this Directive is the total rate which will include the fixed lending rate for loans added to other collectable charges.
Of late, the CBM has been instrumental in loosening previously strict limitations on banks operating in Myanmar. These increased rates provide much needed relief to banks and further liberalizes this sector.
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This article is written by DFDL Lawyers.
This article was first published on the DFDL website.
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