BNM Proposes Financial Inclusion Framework and KYC Guidance
The Bank Negara Malaysia (BNM) proposed the financial inclusion framework 2023-2026, with the feedback period ending on March 31, 2023. The framework will consider alignment of strategies toward new emerging growth angles in financial services, along with the achievement of the United Nation’s Sustainable Development Goals (SDGs) and the Environmental, Sustainability and Governance (ESG) propositions for higher value creation. BNM also proposed enhanced requirements and guidance in implementing electronic Know-Your-Customer (e-KYC) solutions for the on-boarding of individuals and legal persons to the financial sector. The e-KYC requirements are relevant for various financial sector entities, including conventional and Islamic banks, with the comment period ending on May 02, 2023.
The financial inclusion framework is aligned with the Financial Sector Blueprint 2022-2026 and is intended to serve as a four-year strategic roadmap to advance financial inclusion. The discussion paper outlines the following key strategies that BNM plans to implement to promote financial inclusion in Malaysia:
- Address the gaps and accelerating the advancement of financial inclusion through identified policy objectives: expanding access to financial services for the unbanked population, promoting digital financial services such as mobile banking and e-wallets, increasing access to financial services for those who are currently excluded from the formal financial system, accelerating small and medium enterprise (SME) development through technology and digital adoption, developing a landscape that can meet the needs of the unserved and underserved segments, and improving targeted support for the vulnerable segments
- Strengthen consumer protection measures to ensure that consumers are not taken advantage of by financial institutions; measures include requiring financial institutions to disclose fees and charges in a clear and transparent manner
- Support micro, small, and medium-sized enterprises by providing access to financial services and integrate the two cross-cutting themes within the financial inclusion strategies: embedding gender equality considerations and strengthening impact measurement and evaluation of financial inclusion efforts
- Use strategic enablers in industry-wide efforts that support the effective implementation of the framework, with these strategic enablers being forging strategic collaborations or partnerships, data sharing, financial infrastructure, and ensuring a regulatory environment
BNM is inviting written feedback on this discussion paper, including suggestions on areas to be clarified and alternative proposals that BNM should consider. The written feedback should be supported by a clear rationale, accompanying evidence or practical examples, where appropriate, to facilitate greater understanding of its context. BNM plans to publish, in 2023, a list of key performance indicators (KPIs) on consultation with stakeholders that will account for the quality of financial services and components of financial capabilities and health.
Related Links
- Press Release on Financial Inclusion Framework
- Proposed Financial Inclusion Framework (PDF)
- Proposal on e-KYC (PDF)
Keywords: Asia Pacific, Malaysia, Banking, Financial Inclusion, SDG, ESG, SME, KYC, BNM
Featured Experts
Hasan Cerhozi
Hasan leads Moody’s Analytics ESG methodology development. He is expert on carbon transition, nature related risks and is a guest lecturer at ESSEC Business school on sustainable finance.
James Partridge
Credit analytics expert helping clients understand, develop, and implement credit models for origination, monitoring, and regulatory reporting.
Previous Article
MNB Publishes Results of Lending Survey, Issues Other UpdatesRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
