PETALING JAYA: Bank Negara Malaysia (BNM) on Friday released an exposure draft on a licensing framework for digital banks, which will form part of the series of measures adopted by the central bank to enable innovative application of technology in the financial sector.
In a statement, BNM said up to five licences may be issued to qualified applicants to establish digital banks to conduct either conventional or Islamic banking business in Malaysia.
“The exposure draft outlines the proposed framework for the licensing of digital banks to offer banking products and services to address market gaps in the underserved and unserved segments. Such digital banks are expected to offer meaningful access to and promote responsible usage of suitable and affordable financial solutions to financial consumers,” it said.
An asset threshold of not more than RM2 billion in the initial three to five years of operations will also be applied.
The central bank said 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 relevant requirements that comprise among others, standards on prudential, business conduct and consumer protection, as well as on anti-money laundering and terrorism financing.
“During the foundational phase, licensed digital banks will be subjected to a more simplified regulatory requirements relating to capital adequacy, liquidity, stress testing and public disclosure requirements,” BNM added.
On the minimum capital funds, digital banks will be required to maintain minimum capital funds unimpaired by losses of RM100 million during the foundational phase, and RM300 million thereafter.
The central bank is inviting written feedback on the exposure draft including areas to be clarified or elaborated further or alternative proposals that BNM should consider, and should be submitted by Feb 28 2020.
BNM aims to finalise the policy document by the first half of 2020.
source https://www.thesundaily.my/business/bnm-releases-draft-framework-for-digital-banks-EA1828341
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