Arakan

The land that is known as Arakan by the foreigners is called Rakhaing-pray by its own people, Rakhaing-thar (Arakanese) who were titled this name in honour of preservation on their national heritage and ethics or morality.

Burmese Central Bank gives green light to offer consumer loans

Posted by Arakan Indobhasa Monday, September 26, 2011

Chiang Mai (Mizzima) – The Burmese Central Bank has given a green light for banks to begin offering installment loans under a “hire-purchase system” to private citizens in cooperation with commercial companies and banks.

An official from the Central Bank in Naypyitaw told Mizzima: “The central bank has informed all state-owned banks and private banks that they can now do hire-purchase loans if they wish to do so.” The advisory was sent to all state-owned and private banks on September 15.

The new Central Bank of Burma in Naypyitaw. Photo: popularmyanmar.com
The new Central Bank of Burma in Naypyitaw. Photo: popularmyanmar.com

Banks that want to participate in loans, known as “installment loans” in the West, must provide information from the companies, the agreement signed by customers and the terms and conditions between a customer and the bank. After checking the documents, the central bank would authorize a bank to make the loan, said an official of the Central Bank.

Ye Min Oo, an official at the Asia Green Development Bank, a private bank, said the bank would try to offer the service to its customers by the end of October.

In the installment-loan system, a bank must pay the price of a commodity as down payment to the sales company on behalf of the buyer and then the buyer must pay the price of the commodity in installments to the bank. The bank will charge the customer an interest rate based on the amount of down payment, said bank official Ye Min Oo.

“Under this system, it will be different from the interest rate for a bank loan. For instance, for a bank loan the interest rate is 15 per cent, but the rate for a high-purchase loan will be different. We are still calculating this rate,” said Ye Min Oo.

The banks will be provided a guarantee for the payment by either an employer of the buyer or the sales company.

“This system is needed for the country. We will use the secure-guarantee system,” said Ye Min Oo. He said a bank would not incur losses under this system.

Commodities that may be purchased include furniture, home electrical appliances, electronic products, computers and other items.

The private Kanbawza Bank was still awaiting the central bank’s directive, said bank official Aung Kyaw Myo.

Finance and Revenue Minister Hla Tun told Parliament in late August that the government was consulting the Union Attorney General on amending the Burma Central Bank Law and Burma Financial Institutions Law in order to update them according to current needs.

Ten years ago, hire-purchase loans were provided by the now-defunct Asia Wealth Bank and Myanmar May Flower Bank. The central bank banned the service after 2003.

http://www.mizzima.com/business/5985-burmese-central-bank-gives-green-light-to-offer-consumer-loans.html

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