- POSTED: 26 Jun 2014 22:40
- UPDATED: 26 Jun 2014 22:44
Myanmar's central bank has said it plans to grant licences to foreign banks by September as it seeks to boost the flow of money to local businesses in the once tightly controlled economy.
NAY PYI TAW, Myanmar: Myanmar's central bank has said it plans to grant licences to foreign banks by September as it seeks to boost the flow of money to local businesses in the once tightly controlled economy.
The nation's reformist regime wants to modernise the country's antiquated banking sector, which was left in tatters by decades of military rule and economic mismanagement.
Foreign banks hunting new markets have been hungrily eying the nation's already rapidly growing financial sector.
Speaking to lawmakers in Nay Pyi Taw on Wednesday, central bank vice-governor Set Aung said overseas lenders will be issued licences by September although some restrictions will still apply.
They will not be allowed into the retail banking sector and will have to hold at least US$75 million in capital. They will also only be allowed to operate a single branch.
The controls have been considered "for the interests of local bankers, local businessmen," Set Aung told parliament.
Lawmaker Phyo Min Thein confirmed the September target date for the licences to be issued, adding the move will "help local banks too".
According to the Central Bank website, 35 foreign banks already run offices in the once-junta ruled nation but so far do not conduct banking operations. They are mainly from the Asia region.
Nationalised by the military regime which came to power in 1962, banking disintegrated with the economy during the bungled implementation of socialist-style policies which were laced with superstition -- the kyat currency was at one point issued in denominations of nine, an auspicious number.
That demise was deepened by US financial sanctions, which have been partly lifted in response to sweeping changes since the end of junta rule in 2011.
But Myanmar's banking system is yet to recover.
It suffered a blow in 2003 when three banks collapsed in a crisis exacerbated by Central Bank policies, such as recalling loans from borrowers.
The International Monetary Fund has praised Myanmar's economic reforms, including giving autonomy to the central bank and adopting a floating rate for the kyat.
In January, it forecast growth in fiscal 2013-2014 to rise to 7.5 per cent and near 7.8 per cent the following year.