Featured Product

    BNM Consults on Regulatory Framework for Digital Banks

    March 03, 2020

    BNM issued an updated exposure draft on the licensing framework for digital banks. The update incorporates the proposed simplified regulatory framework for digital banks applicable during the foundational phase, wherein a licensed digital bank shall operate with an asset limit for a period of up to five years from its commencement of operations. The simplified framework is intended to reduce regulatory burden for new entrants that have strong value propositions for the development of the Malaysian economy, while safeguarding the integrity and stability of the financial system. The consultation period is open until April 30, 2020. Applications for new licences will be open on issuance of the Policy Document.

    This exposure draft sets out the proposed framework to allow entry of digital banks with innovative business models that seeks to serve the underserved and unserved market segments. This framework forms part of a series of measures adopted by BNM to enable innovative application of technology in the financial sector. The regulatory framework for digital banks is applicable to applicants under section 10 FSA, applicants under section 10 IFSA, licensed digital banks, licensed Islamic digital banks, and shareholders of proposed licensed digital banks. Digital banks will be required to comply with all equivalent regulatory requirements applicable to incumbent banks after the foundational phase. Key features of the simplified regulatory framework include:

    • Capital Adequacy Requirement—The risk categories to calculate the credit and market risk components for risk-weighted assets under Basel II capital framework have been rationalized into simpler categories.
    • Liquidity requirement—A licensed digital bank shall hold an adequate stock of unencumbered Level 1 and Level 2A high-quality liquid assets (HQLA) equivalent to at least 25% of its total on-balance sheet liabilities.
    • Stress Testing—A licensed digital bank shall be exempt from requirements under the policy document on stress testing.
    • Public Disclosure (Pillar 3)—A licensed digital bank shall be exempt from requirements under the policy documents on Risk-Weighted Capital Adequacy Framework (Basel II)−Disclosure Requirements (Pillar 3) and Capital Adequacy Framework for Islamic Banks (CAFIB)−Disclosure Requirements (Pillar 3).

     

    Related Links

    Comment Due Date: April 30, 2020

    Keywords: Asia Pacific, Malaysia, Banking, Digital Banks, Licensing Framework, Capital Adequacy, Liquidity, Stress Testing, Fintech, Basel II, Islamic Banking, BNM

    Featured Experts
    Related Articles
    News

    BoE Seeks Information Before Migrating Statistical Reporting to BEEDS

    The Bank of England (BoE) published the Statistical Notice 2021/09 requiring additional information from firms and software vendors to assist in the onboarding and testing phases for migrating statistical reporting to the BEEDS portal.

    October 25, 2021 WebPage Regulatory News
    News

    FCA Publishes Final Rules on Investment Firms Prudential Regime

    The Financial Conduct Authority (FCA) published the final rules on the Investment Firms Prudential Regime (IFPR) to streamline and simplify the prudential requirements for solo-regulated UK firms authorized under the Markets in Financial Instruments Directive (MiFID).

    October 25, 2021 WebPage Regulatory News
    News

    CFRF Publishes Guides to Manage Financial Risks from Climate Change

    The working groups of the Climate Financial Risk Forum (CFRF) published a second round of guides (or Session 2 guides), written by the industry for the industry, to help financial firms manage climate-related financial risks.

    October 21, 2021 WebPage Regulatory News
    News

    PRA Finalizes Policy for Non-Performing Exposure Securitizations

    The Prudential Regulation Authority (PRA) published the final Policy Statement PS24/21 that contains the new Non-Performing Exposures Securitization Part of the PRA Rulebook and an updated Supervisory Statement SS10/18 on the general requirements and capital framework with respect to securitizations.

    October 21, 2021 WebPage Regulatory News
    News

    EBA Updates Filing Rules for Supervisory Reporting

    The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.

    October 19, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Procedures for Collection of AnaCredit Data

    The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.

    October 19, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Procedures for Collection of AnaCredit Data

    The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.

    October 19, 2021 WebPage Regulatory News
    News

    EBA Publishes Standards on Disclosure of Investment Policy Under IFR

    The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).

    October 19, 2021 WebPage Regulatory News
    News

    EU to Explore Potential of Establishing a Joint Cyber Unit

    The European Council adopted conclusions inviting the European Union (EU) and the member states to further develop the cybersecurity crisis management framework.

    October 19, 2021 WebPage Regulatory News
    News

    EC Sets Out Work Program for 2022

    The European Commission (EC) adopted the work program for 2022.

    October 19, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7598