CBM lowers interest cap on loans

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.