Featured Product

    BNM Announces Regulatory Measures to Address Impact of COVID Outbreak

    March 27, 2020

    BNM announced a number of regulatory and supervisory measures to support banking institutions to assist individuals, small and medium-size enterprises (SMEs), and corporations to manage the impact of COVID-19 outbreak. These measures relate to deferment and restructuring of loans or financing facilities, liquidity conditions, capital and liquidity buffers, and extension of consultation periods. BNM also published a set of frequently asked questions (FAQs) to address public queries regarding the Loan or Financing Deferment Measure.

    Deferment and Restructuring of Loans or Financing Facilities

    To ease the cash flow of individuals and SMEs that are likely to be the most affected by COVID-19 outbreak, banking institutions will offer to defer all loan or financing repayments for six months, with effect from April 01, 2020. Individuals and SMEs that do not wish or need to avail of these facilities can continue with the current repayment structures. Banking institutions will also facilitate requests by corporations to defer or restructure their loans or financing repayments.

    Ample Liquidity Conditions

    During this period, the financial intermediation activity can be supported by sufficient liquidity in the banking system. BNM will continue to supply daily ringgit liquidity to banks via various tools under its open market operations, including the outright purchase of government securities, FX swaps, reverse repos, and the standing facility. BNM also took preemptive measures to boost liquidity through the recent reduction in Statutory Reserve Requirement (SRR) ratio by 100 basis points. 

    Additional Supervisory and Prudential Measures

    BNM reviewed its planned regulatory and supervisory activities in 2020 to ease compliance and operational burdens on banking institutions. 

    • Banking institutions may draw-down on the capital conservation buffer of 2.5%, operate below the minimum liquidity coverage ratio of 100%, and utilize the regulatory reserves that were set aside during periods of strong loan growth. BNM fully expects banking institutions to restore their buffers within a reasonable period after December 31, 2020.
    • The implementation of the net stable funding ratio will proceed as scheduled on July 01, 2020. However, the minimum net stable funding ratio will be lowered to 80% for now, although banking institutions will be required to comply with the requirement of 100% from September 30, 2021.
    • BNM will extend the timeline for all ongoing consultations on discussion papers and exposure drafts to June 30, 2020 and beyond. 
    • Flexibility will also be provided to banking institutions to meet timelines for regulatory submissions.

    Enhancements to Financing Facilities to Assist Affected SMEs

    BNM is enhancing the existing financing facilities under the BNM Fund for SMEs in the form of:

    • An increase in the allocation of the Special Relief Facility to provide relief assistance to more SMEs who are affected by the COVID-19 outbreak. The maximum financing rate is now lowered from 3.75% per annum to 3.50% per annum. The enhanced Special Relief Facility is available until December 31, 2020.
    • An increase in the allocation of the All Economic Sectors Facility to enhance access to financing for SMEs and to support growth, with the maximum financing rate being reduced from 8% per annum to 7% per annum.
    • Other facilities to SMEs, namely the Automation and Digitalization Facility and Micro Enterprises Facility.

    Program to Support the B40 Segment in Generating Sustainable Income and Achieve Financial Resilience

    To further facilitate access to funding and help build entrepreneurship capability among B40 micro-entrepreneurs, a social finance program will be introduced by participating Islamic banks in collaboration with some State Islamic Religious Councils and implementation partners. The program is designed to mobilize social finance contributions toward providing seed capital that is packaged with micro-financing for eligible micro-entrepreneurs to start and grow business to generate sustainable income.

     

    Related Links

    Keywords: Asia Pacific, Malaysia, Banking, COVID-19, SME, Capital Buffers, Liquidity Buffer, NSFR, FAQ, Islamic Banking, BNM

    Featured Experts
    Related Articles
    News

    APRA Issues Interim Update to Policy Priorities for 2021 and Beyond

    In a letter addressed to the industry, the Australian Prudential Regulation Authority (APRA) set out an updated schedule of policy priorities for the banking, insurance, and superannuation industries.

    September 24, 2021 WebPage Regulatory News
    News

    EC Adopts Solvency II and Resolution Rules Package for Insurers

    The European Commission (EC) adopted a comprehensive review package of Solvency II rules in the European Union.

    September 22, 2021 WebPage Regulatory News
    News

    OCC Issues Booklets on Regulatory Reporting and Earnings

    The Office of the Comptroller of the Currency (OCC) issued Versions 1.0 of the "Earnings" and "Regulatory Reporting" booklets of the Comptroller's Handbook.

    September 22, 2021 WebPage Regulatory News
    News

    ECB Sets Out Results of Economy-Wide Climate Stress Tests

    The European Central Bank (ECB) published results of its economy-wide climate stress test, which aimed to assess the resilience of non-financial corporates and euro area banks to climate risks.

    September 22, 2021 WebPage Regulatory News
    News

    EBA Examines Implications of Increasing Use of Digital Platforms in EU

    The European Banking Authority (EBA) published a report on the use of digital platforms in the banking and payments sector in European Union.

    September 21, 2021 WebPage Regulatory News
    News

    HKMA Issues Updates on Policy Measures Intended to Ease COVID Impact

    The Hong Kong Monetary Authority (HKMA) published updates on the policy measures that were announced in context of the ongoing pandemic.

    September 21, 2021 WebPage Regulatory News
    News

    ISDA Responds to BCBS Proposal on Treatment of Cryptoasset Exposures

    The International Swaps and Derivatives Association (ISDA), along with several other associations, submitted a joint response to the Basel Committee on Banking Supervision (BCBS) consultation on preliminary proposals for the prudential treatment of cryptoasset exposures.

    September 21, 2021 WebPage Regulatory News
    News

    BIS Quarterly Review Discusses Developments in Fintech and ESG Space

    BIS published the September issue of the Quarterly Review, which contains special features that analyze the rapid rise in equity funding for financial technology firms, the effectiveness of policy measures in response to pandemic, and the evolution of international banking.

    September 20, 2021 WebPage Regulatory News
    News

    BCBS to Consult on Supervisory Practices for Climate Risks by Year-End

    The Basel Committee for Banking Supervision (BCBS) met in September 2021 and reviewed climate-related financial risks, discussed impact of digitalization, and welcomed efforts by the International Financial Reporting Standards (IFRS) Foundation to develop a common set of sustainability reporting standards

    September 20, 2021 WebPage Regulatory News
    News

    OCC Identifies Operational Risk Deficiencies in MUFG Union Bank

    The Office of the Comptroller of the Currency (OCC) issued a Cease and Desist Order against MUFG Union Bank for deficiencies in technology and operational risk governance.

    September 20, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7494