September 28, 2017

BNM issued the exposure draft on net stable funding ratio (NSFR) for banking institutions. The two-month consultation ends on November 27, 2017 and BNM intends to implement the NSFR no earlier than January 01, 2019.

BNM is cognizant that, at the global level, there is considerable uncertainty in the implementation schedule and divergence from the internationally agreed timeline of January 01, 2018. In deciding the implementation schedule of NSFR, BNM considered the international nature of Malaysian banking institutions and the operational requirements of banking institutions in meeting the NSFR standard, in addition to the need to ensure the smooth functioning of intermediation process. As at June 30, 2017, the banking system liquidity coverage ratio (LCR) stood at 141% while the system NSFR is estimated at above 100%. BCBS published the NSFR liquidity standard in October 2014, as part of the Basel III regulatory reforms. NSFR requires banking institutions to maintain a stable funding profile in relation to the composition of their assets and off-balance-sheet activities. This standard complements the liquidity coverage ratio (LCR), which has been phased in since 2015.

 

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Comment Due Date: November 27, 2017

Keywords: Asia Pacific, Malaysia, Banking, NSFR, Liquidity Risk, Basel III, BNM


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