The new Microfinance Law was unanimously approved by the Lower House of Parliament (Pyithu Hluttaw) on 5 February. The legislation will now move to the Upper House for consideration before it is sent to the president to be enacted.
As reported by the Myanmar Financial Services Monitor, the draft law was submitted on 10 December by Daw Khin San Hlaing, an MP and chair of the Banking and Finance Development Committee, to replace the 2011 Microfinance Business Law.
Member of Bill Committee U Zaw Win and Military representative Lt-Col Htin Lin Oo tabled a motion for the house to consider the amendments . The house then approved all of the amendments to the legal framework with the consent of the Ministry of Planning, Finance and Industry (MoPFI).
The MFSM understands the goals of the legislation are as follows:
- Prevent member companies from going into debt
- Accelerate development of the MFI sector
- Transform INGOs operating lending businesses into microfinance companies
- Secure the privacy and information of members and share necessary information related to loan disbursement
- Educate members about financial management
- Restrict illegal lending firms
- Form a public association to support the MFI sector
The new law reportedly contains more severe penalties and fines against entities conducting microfinance operations without a valid license, as well as provisions against illegal monitoring, disclosure or inappropriate use of financial information and customer data.
Myanmar Financial Services Monitor spoke with managing director of the MMFA Phyu Yamin Myat, who noted that MMFA expects the following changes to be included:
- Allowing MFIs to take collateral for loans larger than Ks3m.
- Increasing the enterprise loan limit from Ks10m to Ks20m
- Setting up mobile financial services for MFIs and making sure the existing legal framework for digital financial services will not restrict MFIs
- Allowing an information system to check borrower information, similar to a credit bureau
- Expanding insurance related clauses
- Deregulating select procedures, such as requesting approval for a change of address
Since the enactment of Microfinance Business Law in 2011, the sector has grown rapidly and now serves over 3 million customers. As of December 2019, 189 MFIs had Ks4.8trn disbursed loans and collected Ks350bn deposits, according to Financial Regulatory Department.