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KUALA LUMPUR (December 31): Bank Negara Malaysia (BNM) issued the policy document on the licensing framework for digital banks following a six-month public consultation, setting June 30, 2021 as the deadline for the Submission of applications to the central bank for those who wish to conduct digital banking business.
Digital banks will be required to comply with the requirements of the Financial Services Act 2013 (FSA) or the Islamic Financial Services Act 2013 (IFSA), including standards on prudence, Shariah, business conduct, and consumer protection, as well as on money laundering. and terrorist financing, BNM said today in a statement.
“Applicants should be guided by the application procedures described in this Policy Document, as well as the Application Procedures for New Licenses under the FSA and IFSA, and the Application Procedures for the Acquisition of Shares and to be a Company Financial Participation. Up to five licenses can be issued to qualified applicants. Notification about the granting of the license will be made by the first quarter of 2022, “he said.
BNM said that the licensing framework for digital banks aims to enable the innovative application of technology to improve the financial well-being of individuals and businesses and foster sustainable growth.
This includes expanding meaningful access and promoting the responsible use of appropriate financial solutions for underserved and underserved segments.
The framework takes a balanced approach to enable the admission of digital banks with strong value propositions while safeguarding the integrity and stability of the financial system, as well as the interests of depositors, he said.
“To achieve these results, a simplified regulatory framework will be applied to digital banks during the initial stage of operations, consistent with an asset threshold of no more than RM3 billion over three to five years.
“This functions as a critical phase for licensees to demonstrate their viability and sound operations, and for the bank to look at the performance of licensed digital banks and the associated risks arising from their operations,” BNM said.
The central bank added that during the founding phase, licensed digital banks will be subject to a more simplified regulatory requirement related to capital adequacy, liquidity, stress tests, Shariah governance, and public disclosure requirements.
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