KUALA LUMPUR – Bank Negara Malaysia (BNM) has adopted a balanced approach to enable the admission of digital banks with strong value propositions and the ability to preserve the integrity and stability of the financial system, said Deputy Finance Minister II Mohd Shahar Abdullah.
“Through this approach, BNM sets the cumulative asset threshold that can be generated by digital banks of not more than RM2 billion in the initial three to five years of operations.
“The foundational phase aims for digital banks to demonstrate their viability and sound operations, while BNM monitors their performance and any attendant risks,” he told the Dewan Negara today.
Mohd Shahar was responding to a question from Senator Datuk Teo Eng Tee @ Teo Kok Chee (Gerakan), who wanted to know about BNM’s proposal to issue digital bank licences for conventional and Islamic banking business and how they will be regulated by the Ministry of Finance (MoF).
The negotiation period for the Exposure Draft on Licensing Framework for Digital Banks ended on June 30, 2020, he said, adding that BNM received almost 50 responses and is currently reviewing the feedback before finalising the digital bank licensing policy document and opening applications for the licence.
He said digital banks will be required to comply with the requirements under the Financial Services Act 2013 or Islamic Financial Services Act 2013, including relevant requirements such as 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 requirement relating to capital adequacy, liquidity, stress testing and public disclosure.
“This is in line with the objective to encourage growth and innovation by digital banks, especially to increase financial access to segments that are lacking or do not have financial services,” he said.