CBM lowers interest cap on loans

20
Mar
2020

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On 12 March 2020, the Central Bank of Myanmar (“CBM”) issued Directive 1/2020 (the “Directive”) and reduced the maximum interest rates on secured and unsecured loans to 12.5% and 15.5% respectively.This marks a small deviation from Directive 1/2019, issued by CBM last year, when it announced maximum interest rates on secured and unsecured loans of 13 and 16% respectively.

The Directive also confirms the following:

  • The minimum interest rates on saving deposits, savings bonds and maturity deposits shall be 7.5% (down from 8% earlier).
  • For the purpose of what counts as a ‘secured loan’, the Directive restates that collateral includes, but is not limited to, the following: land and buildings, gold, jewelry, diamonds and other precious gems, savings bonds, government treasury bonds, fixed deposits, part-time deposits, mortgageable securities and negotiable instruments, pledges, loans with credit guarantee and other loans.

Timeframe

The Directive has become effective from 16 March 2020.

AUTHOR
Tim Vanderlee
Tim Vanderlee
Legal Associate
VDB Loi, Myanmar

Tim is a Legal Associate in our Banking & Finance team, who also advises clients on corporate matters. Before joining VDB Loi, Tim worked for over two years as an associate with a major international Dutch law firm, specializing in capital markets and supreme court litigation. He holds an LL.B. and a 2-year research LL.M. from Utrecht University, as well as degrees from King’s College, Cambridge (Examination in Law for European Students) and Sidney Sussex College, Cambridge (LL.M.).

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