KUALA LUMPUR: Bank Negara Malaysia (BNM) has issued an updated Exposure Draft on the Licensing Framework for Digital Banks that incorporates the proposed simplified regulatory framework for digital banks applicable during the foundational phase.
In a statement today, it said the simplifications aim to reduce the regulatory burden for new entrants that have strong value propositions for the development of the Malaysian economy, whilst safeguarding the integrity and stability of the financial system.
BNM said key features of the simplified regulatory framework include a capital adequacy requirement, under which the risk categories to calculate the credit and market risk components for risk-weighted assets under the Basel II capital framework have been rationalised into simpler categories.
The updated draft also includes a liquidity requirement, under which 25% of the digital bank’s on-balance sheet liabilities must be held in high quality liquid assets, it said.
“Digital banks will be required to comply with all equivalent regulatory requirements applicable to incumbent banks after the foundational phase. Bank Negara Malaysia is extending the consultation period for the Exposure Draft to April 30.
“Applications for new licence(s) will be open upon issuance of the Policy Document,” it added. – March 3, 2020, Bernama
