No need to be worried about bank loan rumours: CBM

Rumours of runaway non-performing loans (NPLs) at local banks are unfounded and the public has nothing to be concerned about, Daw Khin San Hlaing, chair of the Pyithu Hluttaw’s Banking and Financial Development Committee, said after a meeting between the committee and central bank on Tuesday evening.

“The CBM reassured us that private banks are now adhering to regulations and taking stricter action on errant borrowers, so there is nothing to worry about,” said Daw Khin San Hlaing, who is also a Pyithu Hluttaw MP from Pearl Constituency of Sagaing Region.

The rumours arose after comments made by CBM deputy governor U Soe Thein in response to questions by MPs about the CBM’s stance on businesses which have difficulty repaying their loans and if there are plans to classify NPLs.

U Soe Thein said that there is a large amount of unpaid loans that have been rolled over indefinitely and that banks should follow regulations issued by the CBM in 2017 in dealing with outstanding overdraft loans. He added that banks should be stricter when issuing new loans and raise efforts to collect debt from errant borrowers.

U Soe Thein said that it was the central bank’s duty to ensure that banking and financial regulations were adhered to and that its mandate included oversight on banks’ responsibilities for the deposits that they accept.

As the CBM has done what is necessary to help borrowers repay their debt, the central bank is no longer considering any lenient solutions when dealing with NPLs, he said.

On Monday evening, the central bank issued a statement to clarify U Soe Thein’s comments, saying they did not align fully with its stance. The CBM that it would continue to work with borrowers to facilitate loan repayments and as the CBM is the lender of last resort, it will help and fully support the banks should the need arise.

U Soe Thein resigned the following day but the CBM has yet to issue an official announcement on the matter. The Myanmar Times understands that the central bank has not accepted the resignation.

U Soe Thein was reelected as deputy governor of the CBM in 2017 and was involved in defining new financial regulations, liberalising the banking sector and stabilising the exchange rate and inflation.

Source: Myanmar Times

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