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CBM lowers interest cap on loans

CBM lowers interest cap on loans

March 20, 2020

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 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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