The nine foreign banks granted Myanmar banking licences on October 1 will be allowed to offer loans to foreign and local companies in kyat with interest rates fixed by the Central Bank of Myanmar to a range between ten and 13 percent, said a Facebook post by economist U Khin Maung Nyo quoting the CBM’s deputy governor, U Set Aung.
U Set Aung confirmed to Mizzima on October 3 that he had supplied this information to the economist.
“If the Central Bank cancelled fixed rates, the country would suffer the impact of higher interest rates,” said the notes from U Set Aung.
He added that if foreign banks were to provide loans in US dollar, the central bank would not impose fixed interest rates.
“Those banks can loan to [foreign and local companies] with their own interest rates based on the interest rates of US dollars in the international market, and subject to the credit rating of the borrowers,” said U Set Aung.
U Set Aung added that he believed the current level of interest rates in Myanmar was on par with its regional neighbours.
Speaking at a press conference held at the CBM’s Nay Pyi Taw office on October 1, U Set Aung said the foreign banks were awarded preliminary approval to operate in Myanmar and these banks have 12 months to comply with MCB requirements before they are awarded a final licence.
He added that they will be allowed to operate just one branch in country, cannot engage in retail banking and will be required to invest a minimum of US$75 million (K75 billion) of contributed capital.
As for providing loans to local companies in local currency, foreign banks are required to cooperate with local banks in the form of a syndicated loan, said U Set Aung.
CORRECTION: This article corrects the previous version that stated that U Set Aung posted these remarks on his own Facebook page and that foreign banks are ‘allowed’, rather than ‘required’ to cooperate with local banks when providing loans in kyat to local companies.
