CBM hikes minimum reserve requirement ratio

With a view to taming inflation and controlling the increase in cash in circulation, the Central Bank of Myanmar (CBM) raised the minimum reserve requirement ratio of local currency from 3.5 to 3.75 per cent in liquid assets, according to a directive (4/2024) dated 30 April 2024.
This amendment of the minimum reserve requirement ratio will be effective from 3 May 2024.
Therefore, the state-owned banks, private banks and foreign bank branches are entitled to put three per cent of Cash at the Bank (CAB) into the Central Bank’s deposit account and hold 0.75 per cent of CAB.
Furthermore, the interest on average excess reserve was set at 3.8 per cent to facilitate banking operations. The banks that hold an average excess reserve exceeding seven billion kyats are at least entitled to enjoy the interest. Excess reserves held by the banks are limited to K50 billion.
The financial institutions must hold the specified ratio of the deposits into CBM and the average until the last day of the reserve maintenance period.
Failing to do so is liable to penalties of CBM.
According to CBM’s directive dated 5 April 2023, the minimum reserve requirement ratio was set at 3.5 per cent, with three per cent deposit into the CBM account and 0.5 per cent CAB. The interest rate on the average excess reserve was set at 3.6 per cent. CBM set a new minimum reserve requirement ratio, and the latest directive has superseded the earlier one, No 9/2023, dated 5 April 2023. — NN/EM