Featured Product

    BNM Publishes Regulatory Updates Impacting Banking Sector

    December 31, 2020

    BNM finalized the policy on the licensing framework for digital banks, following a six-month public consultation. BNM is accepting applications for digital banking business or Islamic digital banking business until June 30, 2021 and up to five licenses may be issued to qualified applicants. Notification on the grant of license will be made by the first quarter of 2022. Another development involves the appointment of the Financial Markets Committee (FMC) to oversee the development of an alternative reference rate for Malaysia and to deliberate on the continuity of Kuala Lumpur Interbank Offered Rate (KLIBOR). BNM also announced an update on the new and enhanced financing facilities for small and medium-size enterprises (SMEs) affected by COVID-19 pandemic.

    BNM's licensing framework for digital banks adopts a balanced approach to enable admission of digital banks with strong value propositions while safeguarding the integrity and stability of the financial system as well as depositors’ interests. To achieve these outcomes, a simplified regulatory framework will be applied to digital banks during the initial stage of operations, commensurate with an asset threshold of not more than MYR 3 billion for three to five years. This functions as a foundational phase for the licensees to demonstrate their viability and sound operations and for BNM to observe the performance of the licensed digital banks and attendant risks that arises from their operations. Digital banks will be required to comply with the requirements under the Financial Services Act 2013 (FSA) or Islamic Financial Services Act 2013 (IFSA), including standards on prudential, Shariah, business conduct, consumer protection, and anti-money laundering and terrorism financing. During the foundational phase, licensed digital banks will be subjected to a more simplified regulatory requirement relating to capital adequacy, liquidity, stress testing, Shariah governance, and public disclosure requirements. Submission of applications to conduct digital banking business or Islamic digital banking business shall be made to the Bank no later than 30 June 2021. Applications for digital banking licenses should be guided by the application procedures described in this recently published policy document as well as the Application Procedures for New Licenses under the FSA and IFSA, as well as the Application Procedures for Acquisition of Interest in Shares and to be a Financial Holding Company.  

    In another development, the Financial Markets Committee (FMC) has been appointed to oversee the development of an alternative reference rate for Malaysia and to deliberate on the continuity of Kuala Lumpur Interbank Offered Rate (KLIBOR). BNM envisages that the identified alternative reference rate will run in parallel with the existing KLIBOR, thus providing sufficient time for market participants and stakeholders to prepare for the adoption of alternative reference rate. FMC comprises representatives from BNM, Securities Commission Malaysia, financial institutions, insurers, fund managers, and corporate treasurers. It will be the key forum to discuss the latest international developments on financial benchmarks and is responsible for providing recommendations on the strategic direction for the financial benchmark rates in Malaysia. The first key task for the committee would be to conduct an initial public consultation on the identification of a suitable alternative reference rate and enhancements to the KLIBOR framework if it is retained. FMC will also deliberate on industry-wide standards to facilitate the adoption of alternative reference rate for financial contracts referencing KLIBOR. Regular updates on the progress achieved by the FMC, including its assessment and recommendations, will be published for reference by all market participants.

    As part of the update on the financing facilities for SMEs affected by the pandemic, BNM made announcements related to the Targeted Relief and Recovery Facility (TRRF) and the Micro Enterprises Facility (MEF). The TRRF is now available until December 31, 2021 or full utilization (whichever is earlier). For the TRRF, interested SMEs can apply directly to the participating financial institutions, which comprise commercial banks, Islamic banks, and development financial institutions regulated by BNM via their websites or by visiting the branches of participating financial institutions. The MEF has been enhanced to improve access to credit for micro enterprises, to include self-employed individuals, gig workers on digital platforms, and participants of the iTEKAD program. For the MEF, interested micro enterprises can apply directly to the participating financial institutions under the Skim Pembiayaan Mikro. Additionally, BNM will announce details of the High Tech Facility (HTF) on December 15, 2020.


    Related Links

    Keywords: Asia Pacific, Malaysia, Banking, Digital Banks, Fintech, Licensing Framework, Islamic Banking, Benchmark Reforms, IBOR, Interest Rate Benchmarks, COVID-19, Public Guarantee Schemes, BNM

    Featured Experts
    Related Articles
    News

    EC Rule on Contractual Recognition of Write Down and Conversion Powers

    The European Commission (EC) published the Delegated Regulation 2021/1527 with regard to the regulatory technical standards for the contractual recognition of write down and conversion powers.

    September 17, 2021 WebPage Regulatory News
    News

    APRA Issues Further Guidance on Application of Securitization Standard

    The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to provide guidance to authorized deposit-taking institutions on the interpretation of APS 120, the prudential standard on securitization.

    September 16, 2021 WebPage Regulatory News
    News

    SRB Provides Update on Approach to Prior Permissions Regime

    The Single Resolution Board (SRB) published a Communication on the application of regulatory technical standard provisions on prior permission for reducing eligible liabilities instruments as of January 01, 2022.

    September 16, 2021 WebPage Regulatory News
    News

    APRA Publishes FAQs on Capital Treatment of Overseas Subsidiaries

    The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to clarify the regulatory capital treatment of investments in the overseas deposit-taking and insurance subsidiaries.

    September 15, 2021 WebPage Regulatory News
    News

    EBA Finalizes Guidance to Assess Breaches of Large Exposure Limits

    The European Banking Authority (EBA) published the final report on the guidelines specifying the criteria to assess the exceptional cases when institutions exceed the large exposure limits and the time and measures needed for institutions to return to compliance.

    September 15, 2021 WebPage Regulatory News
    News

    PRA Finalizes Changes to Consolidated Prudential Rules Under CRD5/CRR2

    The Prudential Regulation Authority (PRA) issued the policy statement PS20/21, which contains final rules for the application of existing consolidated prudential requirements to financial holding companies and mixed financial holding companies.

    September 15, 2021 WebPage Regulatory News
    News

    EBA Revises Guidelines on Stress Tests of Deposit Guarantee Schemes

    The European Banking Authority (EBA) revised the guidelines on stress tests to be conducted by the national deposit guarantee schemes under the Deposit Guarantee Schemes Directive (DGSD).

    September 15, 2021 WebPage Regulatory News
    News

    Nordea Bank and EIB Sign Agreement to Fund Green Projects in Nordics

    The European Commission (EC) announced that Nordea Bank has signed a guarantee agreement with the European Investment Bank (EIB) Group to support the sustainable transformation of businesses in the Nordics.

    September 15, 2021 WebPage Regulatory News
    News

    HKMA Endorses Industry Guidance to Support LIBOR Transition

    The Hong Kong Monetary Authority (HKMA) issued a circular, for all authorized institutions, to confirm its support of an information note that sets out various options available in the loan market for replacing USD LIBOR with the Secured Overnight Financing Rate (SOFR).

    September 14, 2021 WebPage Regulatory News
    News

    OCC Issues Booklet on Supervision of Problem Banks

    The Office of the Comptroller of the Currency (OCC) issued a new "Problem Bank Supervision" booklet of the Comptroller's Handbook. The booklet covers information on timely identification and rehabilitation of problem banks and their advanced supervision, enforcement, and resolution when conditions warrant.

    September 13, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7481