You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

January 28, 2021

Myanmar Issues New Guidelines for Non-Banking Financial Institutions

Subscribe to Updates

On January 26, 2021, the Central Bank of Myanmar (CBM) published Notification 1/2021 in relation to non-banking financial institutions (NBFIs). This notification, which took immediate effect and has far-reaching implications for NBFI operations in Myanmar, applies to NBFIs wishing to conduct finance company business, leasing business, or factoring business, which are defined in the Financial Institutions Law (2016) (FIL) as follows:

  • Finance company business is “business engaging primarily in financing the purchase of goods or services with funding other than deposits from the public.” Interest would be charged on such finance.
  • Leasing business is “the business of letting or sub-letting movable property on hire, regardless whether the letting is with or without an option to purchase the property.” An obvious example would be vehicle leasing.
  • Factoring business is “the business of financing accounts receivables.” This is when a business sells its accounts receivable at a discount.

The key provisions of the notification are summarized below.

NBFI Registration

To conduct any of the above businesses, an individual or company must apply for a registration certificate from the CBM by submitting the documents specified in the notification. The registration certificate may come with terms and conditions prescribed by the CBM on a case-by-case basis. It seems likely that these terms and conditions could include minimum capital requirements, but this remains to be seen.

Trading as an NBFI without a CBM certificate is punishable by two to five years imprisonment and a fine of MMK 500 million (approx. USD 375,000).

NBFI Certificate Revocation

The CBM has extensive powers to revoke the NBFI certificate in certain circumstances, including failure to comply with the terms and conditions of the registration certificate; conducting non-NBFI business; conducting business in a manner detrimental to the interests of consumers; failure to comply with anti-money laundering or counter terrorism laws and regulations; and so on.

Prohibition on Deposit Acceptance

The notification makes clear that, unlike a commercial bank, an NBFI may not accept a deposit, which is defined by the FIL as “a sum of money paid on terms under which it will be repaid or it is repayable, either wholly or in part, with any consideration in money or money’s worth and such repayment being either, on demand or at a time or in circumstances agreed by the person or an entity making the payment and the person receiving it.”

Foreign Ownership

Interestingly, the notification refers to changes in ownership from local to foreign control, or ceasing the status of a foreign company, which implies that 100% foreign-owned NBFIs will be permitted. From our discussions with the CBM it appears that foreign investment may be allowed on a case-by-case basis, but this has yet to be confirmed. If so, this would be an interesting new opportunity for foreign investors in the financial sector. Currently there are no foreign-owned NBFIs in Myanmar.

Further Provisions

Among other things, the notification continues to deal with interest rates that may be charged by an NBFI, fit and proper requirements for senior management, financial reporting to the CBM, and inspection by the CBM.

For more details on the CBM’s notification for NBFIs, or on any aspect of banking law in Myanmar, please contact Dr. Ross Taylor at [email protected] or +66 2056 5880.

Related Professionals

Practices

Banking and Finance

Location

RELATED INSIGHTS​ 

July 2, 2025
On June 27, 2025, Vietnam’s National Assembly adopted a Resolution on International Financial Centers in Vietnam (“IFC Resolution”), which is set to take effect September 1, 2025, putting forward major policy breakthroughs on multiple fronts. The IFC Resolution has the goal of turning Ho Chi Minh City and Da Nang into leading international financial centers with autonomy and tools to compete, thereby raising Vietnam’s position in the global financial network, in association with economic growth drivers. Below are some of the key points of the IFC Resolution, which has notable changes from previous drafts (see our articles on Vietnam’s Draft Resolution on Financial Centers: Implications for Fintech and Banking and Vietnam’s Emerging Regulatory Landscape for Blockchain and Cryptocurrency), including: The removal of the Central Supervisory Agency. The addition of a definition of international financial centers, which are specific geographic areas in Ho Chi Minh City and Da Nang with members entitled to special policies. The addition of a list of entities eligible for membership, and entitlement to the special policies. Major Policy Breakthroughs The IFC Resolution introduces specific policies in the following areas: Liberalization of foreign exchange control for members, including policies such as open foreign exchange use between members and exemption from foreign exchange control procedures for 100% foreign-owned members. Specialized licensing for members to establish and operate single-member limited liability banks and foreign bank branches with the ability to apply accounting standards, debt classification, risk provisions, and prudential ratios according to the owner’s policies. Creation of a capital market for innovative startups, including a crowdfunding mechanism or private placement mechanism through a licensed platform, and development of a green finance market with green certification. Creation of a regulatory sandbox for fintech technologies, products, services, and business models not yet prescribed by law, offering exemption from compliance with
Read More
June 30, 2025
On April 29, 2025, the State Bank of Vietnam (SBV) issued Circular No. 03/2025/TT-NHNN (Circular 03), which provides detailed guidance on the opening and use of Vietnamese dong (VND) accounts by non-resident foreign investors engaging in indirect investment activities in Vietnam. Circular 03, which took effect on June 16, 2025, amends Circular No. 06/2019/TT-NHNN of the SBV on the management of foreign exchange for foreign direct investment activities in Vietnam (Circular 06) and replaces Circular No. 05/2014/TT-NHNN of the SBV guiding the opening and use of indirect investment capital accounts for implementation of foreign indirect investment activities in Vietnam (Circular 05). Below are some of the key points of Circular 03. Change of Account Name Circular 03 renames “indirect investment capital account” to “indirect investment account” (IIA). This change aligns with the terminology used in other legislation, ensuring consistency across Vietnam’s legal framework governing foreign exchange and investment activities. Additionally, by removing the word “capital,” the new term better encompasses the full range of transactions that may be conducted through these accounts, such as share transfer and other forms of indirect investment-related activities. This helps prevent misinterpretation and facilitates compliance for foreign investors operating in Vietnam. Account Types Circular 03 clearly delineates account types and investor residency status as follows: For non-resident foreign investors: The opening and use of investment accounts in VND is for carrying out transactions related to indirect investment activities. For resident foreign investors: Credit and debit transactions are made through payment accounts in VND in accordance with relevant laws. Additional Permitted Uses of IIAs In addition to the cash inflows and outflows authorized under Circular 05, Circular 03 introduces more cash transactions that can be conducted via IIAs. These include: Receiving interest and other legal income when conducting stock purchase transactions that do not require
Read More
June 27, 2025
Tilleke & Gibbins has contributed the Cambodia, Thailand, and Vietnam chapters to Taking and Enforcing Collateral Security and Guarantees in Southeast Asia, a comparative guide developed by Drew Network Asia (DNA). The publication examines the legal frameworks governing collateral security and guarantees across seven Southeast Asian jurisdictions and is intended to assist financial institutions, corporate borrowers, and cross-border investors in evaluating secured lending options in the region. The guide provides a practical overview of key issues relevant to taking and enforcing security interests—covering, among other topics, the types of assets that may be secured, the formalities and registration requirements for creating security, and the rights and procedures available in enforcement scenarios. Each chapter follows a consistent question-and-answer format to allow readers to compare approaches across jurisdictions easily. While the guide offers a high-level survey of the region’s collateral and guarantee regimes, it also notes that country-specific developments and transaction-specific considerations may affect the applicable requirements. Readers seeking detailed advice are encouraged to consult the lawyers listed at the end of each jurisdictional chapter. The full guide is available for download using the button below or directly from the DNA website.
Read More
June 19, 2025
The Bank of Thailand (BOT) has released draft guidelines establishing principles for managing artificial intelligence (AI) risks in the financial sector. The draft guidelines provide a structured framework for the responsible adoption of AI technologies. Financial service providers will be able to use the guidelines as a reference to appropriately manage their risks in a manner that aligns with internationally recognized best practices. The BOT is accepting public comments on the draft guidelines until June 30, 2025. Scope and Application The draft guidelines apply to all financial service providers, including financial institutions and special financial institutions under the Financial Institution Business Act, as well as payment providers under the Payment Systems Act. These guidelines supplement existing BOT risk management guidelines covering IT risk management, third-party risk management, data governance, and market conduct. The guidelines define AI systems as systems that mimic human intelligence, including machine learning, deep learning, generative AI (such as large language models), and agentic AI. This definition specifically excludes rule-based automation systems like robotic process automation and condition matching. Key Risk Management Principles The guidelines lay out two main principles in managing AI risk. Governance: Financial service providers should define and establish clear roles and responsibilities for their personnel and AI system supervision structures to uphold FEAT (fairness, ethics, accountability, and transparency) principles as follows: Stakeholder roles and responsibilities. Financial service providers should define roles and responsibilities for boards and executives on AI risk oversight. Responsibilities include establishing an AI system usage policy, designating personnel responsible for AI risk management, and building awareness of AI-related risk within the organization. AI system usage policy. The AI system usage policy should be aligned with organizational objectives, regulatory requirements, and FEAT principles. These policies should be reviewed regularly to respond to technological advancements and evolving risk profiles. Risk management
Read More