Thursday, 3 July 2014

Private banks criticised for high service charges

Local private banks in Myanmar have been criticised for not following the instructions of the Central Bank and only providing loans to close business associates.

Various business groups have complained that private banks do not accept gold as mortgage payment and sometimes asked for service charges higher than the actual cost.

“The [private] banks loan about 30 to 40 per cent of the actual price of the pawned property. In other countries, banks loan more than three to four times of the actual price,” said businessman Thaung Win.

Local business owners have be waiting for foreign banks to be allowed to operate in Myanmar to provide much needed access to foreign capital and loans.

“The private banks in Myanmar just make loans to business groups within their circle. It’s like the other businessmen are just there to serve them,” said an official from the Myanmar Rice Millers Association.

A total of 42 banks from Japan, China, Korea, Vietnam, Brunei, India, Australia and New Zealand have been allowed to open bank offices in Myanmar but they cannot make any transactions.

Most of foreign banks interested in Myanmar come from Asia and Southeast Asia with the British-owned Standard Charter as the one exception.

“Most of the firms in Myanmar need financial support. It will be more convenient if people can access the foreign banks directly. If the transaction is done through private banks, people are likely to face additional interest rates. In contrast, the private banks will enjoy higher interest rate and plus, they will also get protection from foreign banks. Only those from the working class may struggle with high interest,” said local businessman Dr. Soe Htun.

source: Eleven Myanmar
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