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Before sunrise over temples of Bagan in MyanmarThe Central Bank of Myanmar (CBM) has issued a warning too certain Myanmar’s private banks it believes have been issuing loans to individuals contrary to the security requirements contained in Myanmar’s 2016 Financial Institutions Law (Financial Institutions Law). The CBM’s Private Sector Committee is responsible for issuing guidance on and coordinating policies to improve transparency in Myanmar’s financial sector. According to Financial Institutions Law personal loans should be secured by collateral such as real property, or other assets. Unsecured loans should only be granted in very limited circumstances. The CBM has warned that certain Myanmar’s private banks are issuing unsecured loans to individuals connected to those banks or who are associates of those banks’ directors. Myanmar does not have an independent credit rating system; meaning banks have no way of verifying borrowers’ creditworthiness, other than by reference to personal relationships, which means individuals known to bank directors are being preferred when it comes to unsecured loan applications. In 2016, the Myanmar Bank Association signed an agreement with Singaporean firm NSP Holdings Limited to establish a joint-venture credit bureau, however the CBM has yet to enact regulations authorising the establishment of the credit bureau. Read more…