Myanmar authorities will grant banking license to new foreign banks next year to provide services in the domestic market

Central Bank of Myanmar, which has a great market potential in the banking sector, will grant banking licenses to new foreign banks allowing them to provide services in the domestic market.

“We are considering allowing more foreign banks. We have plans to start granting license to the most suitable foreign banks,”U Soe Thein, Vice President of Central Bank, said.

So far, there are 13 foreign banks in Myanmar, which have been operating over the last 4-5 years. On November 8, Central Bank allowed them to provide wholesale banking services to local corporations with the aim of widening access to finance for local businesses and to control Kyat depreciation by allowing more currency inflow.

Now, Myanmar has four state-run banks, 24 private banks and 13 foreign banks. Allowing foreign banks to provide financial services to local corporations is making many worried that local banks will not be able to compete with foreign banks that have stronger assets and a widespread network, but U Soe Thein reassured the local banks that there is nothing to worry about concerning this decision. Getting funds from foreign banks will be ten times harder than getting loans from local banks, he added.

“For local corporates, they need to behave in the same way other corporations do. They need to prepare, have business strategies, compliances, budget and pay tax. You can’t borrow from foreign banks without meeting their requirements and expect to get loan which you can’t get from local banks,’’he added.

Since, foreign banks can provide loans not only in foreign currency but also in local currency, demand for Kyat can get stronger bringing reserved Kyat at local banks into investment, economists stated.

(Myanmar Business Today: https://www.mmbiztoday.com/node/8363 )

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