Myanmar banks cheer central bank's compromise on loan deadline!

Even international news here! Therefore, FDI is not coming soon?   

 

Foresee ideas unusual Homeland economic status?
Than under the previous government, corruption and illegal want to laudry money with a cronies mosquito groups and foreigner chinese group after the political project edible played to real estate bubble is going to explode by soon market high risk market run out would be seen that warring arlam talking about by Mrs Serge Pun tycoon (FMI company's).

 

Now the new government do not blow and the Burmese $ Power when (according to the departments under the previous government, graft cope mosquito) When the new policy is made at random end of the real estate Pitcairn bank Pitcairn ended here!

Yimou Lee, Thu Thu Aung

YANGON, Dec 5 (Reuters) - Private banks have welcomed a move by Myanmar’s central bank to allow them more time to clear most of their loan books, giving breathing space to lenders who had warned of a cliff-edge scenario that could have destabilised the financial system. 

Myanmar’s central bank announced in late November that a maximum of three years - instead of the original deadline of six months - would be given to lenders to recover the mostly open-ended “overdraft loans” that make up the bulk of their lending. The move ends a tussle over regulations introduced in July to bring the country’s banks closer to international standards. 

The decision came days after Reuters reported the authorities would back off from a demand that private banks clear most of their loans by January and that it would allow overdraft loans to be converted into three-year loans.

The central bank said the new rules allow banks to “collect their credit facilities smoothly” and “increase repayment capacity of their borrower”. Banks had complained they were given only six months to fix years of junta-era mismanagement and to recover most of their loans amid a sluggish economy. 

“It’s good to move step-by-step towards Myanmar’s banking reform,” said Than Lwin, former deputy central bank governor and senior adviser at Myanmar’s largest lender Kanbawza Bank. “This gives some breathing space for banks.” 

Myanmar’s leader Aung San Suu Kyi has made banking reform a priority for her administration, which faces sky-high expectations after sweeping to power in a 2015 election to end decades of isolation under military rule.

About 70 percent of Myanmar’s more than $9 billion lending pool is in the form of overdraft loans - typically made on preferential terms to lure customers and rolled over indefinitely. To end such practices, the authorities had previously asked banks to get all those loans repaid by January. 

The follow-up instruction from November gives lenders more time to gradually reduce the proportion of overdraft loans on their books. It allows banks to keep such debt at 50 percent of their loan portfolio by July next year, and 20 percent by mid-2020. 

But some banks said the new deadline remained challenging and they were seeking further discussions with the central bank over its impact on their businesses. 

“It’s still a bit difficult to fulfil, but we are all trying to meet the deadline,” said Pyi Soe Htin, executive director of international banking for Yangon-based Asia Green Development Bank. 

Myanmar’s central bank did not immediately respond to requests for comment. 

“A LONG WAY TO GO”

Central bank officials had told Reuters they were concerned that pushing too quickly on reform could trigger volatility in the fledgling financial system. Myanmar’s banks are deeply entwined with one another and with a small group of well-connected businessmen close to the former ruling elite that dominate key sectors of the economy, from real estate to aviation. 

Myanmar’s central bank deputy governor Soe Thein had said he feared the amount of bad debt on private lenders’ books was greater than has so far been reported to the authorities. 

The new rules are an attempt to force lenders to deal with riskier loans in a banking sector that has remained poorly regulated. 

Kim Chawsu, managing partner at Katalysts Investment Group and former chief financial officer of the parent company of lender Kanbawza Group, welcomed the compromise by the authorities, but said Myanmar still has “a long way to go” to tackle its debt pile. 

“Sooner or later you do have to do the surgery anyway. You are just postponing the inevitable,” she said. 

Myanmar banks have continued to lend largely on preferential terms to well-connected customers despite widespread political and economic reforms that began in 2011. 

“We should speed up the reform process,” said a financial professional who has worked as a consultant to the central bank, who declined to be named due to the sensitivity of the matter. “The central bank should not make more concessions after this.” 

(Reporting By Yimou Lee and Thu Thu Aung; Editing by Alex Richardson)

Ref:https://www.reuters.com/article/myanmar-banking/myanmar-banks-cheer-central-banks-compromise-on-loan-deadline-idUSL3N1O42BW?feedType=RSS&virtualBrandChannel=11563