Central Bank of Myanmar sets minimum reserve requirement ratio banks must maintain in MMK and adjusts interest rate on excess reserves

30 May 2024

On 30 April 2024, the Central Bank of Myanmar (“CBM”) issued Directive No. 4/2024 (“Directive”) setting the minimum reserve requirement ratio that banks must maintain in Myanmar kyat (“MMK”) and the interest rate that CBM imposes on a bank’s excess reserves.

Effective 3 May 2024, the minimum reserve requirement ratio that banks must maintain in MMK is increased from 3.5% to 3.75% to control the increase of money in circulation and in view of an increase in the inflation rate. State-owned banks, private banks, and branches of foreign banks shall maintain, out of the 3.75%, 3% as deposits (i.e. a current account balance) with CBM and 0.75% as cash held by the banks.

The interest rate on a bank’s average excess reserve has also been increased, from 3.6% to 3.8%, which applies only to banks having an average excess reserve of at least MMK7 billion. The maximum average excess reserve is limited to MMK50 billion.

The Directive has revoked CBM Directive No. 9/2023 dated 5 April 2023 which set the now superseded minimum reserve requirement ratio of 3.5% and CBM Memorandum dated 5 April 2023 which set the now superseded interest rate on excess reserve at 3.6%.