Friday, April 16, 2021
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Editor's PickMalaysia one step closer to Islamic digital bank dream

Malaysia one step closer to Islamic digital bank dream

Joining its regional peers, Bank Negara Malaysia (BNM) has finally entered the challenger banking race with its long-awaited digital banking regulations.

The new licensing framework, whose development was first announced in March 2019, is a culmination of six months of market engagement.

“The framework adopts a balanced approach to enable admission of digital banks with strong value propositions whilst safeguarding the integrity and stability of the financial system as well as depositors’ interests,” BNM explained.

The regulator has taken the approach of applying a simplified regulatory framework to digital banks during the initial stage of operations, commensurate with an asset threshold of a maximum of RM3 billion (US$748.56 million) for three to five years. The rationale behind this is to create a foundational phase for the licensees to demonstrate their viability and sound operations.

Digital banks will be required to comply with the requirements under the Financial Services Act 2013 or Islamic Financial Services Act 2013, including standards on prudential, Shariah, business conduct and consumer protection, as well as on anti-money laundering and terrorism financing.

Up to five digital bank licenses may be issued. Applications are open until the 30th June 2021, with the successful applicants to be revealed by March 2022. IFN previously reported that several parties have expressed interest in establishing an Islamic digital bank including MyMy and HelloGold.

Neighboring nations such as the Philippines, Singapore and Hong Kong have begun licensing digital banks. The Philippines, which issued relevant regulations last year, began receiving interest from foreign stakeholders potentially keen to enter its nascent Islamic banking industry through a digital setup.

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