Malaysia - Banking SystemsMalaysia - Banking
The structure of the Malaysian financial system has evolved to become less fragmented through consolidation and rationalization. The evolution started when the government took measures to strengthen Malaysia's banking system following the regional financial crisis in mid-1997. The country’s central bank, Bank Negara Malaysia (BNM), directed the merger of Malaysia's local banking institutions into ten anchor banks, which was completed in 2002. The government encouraged further mergers among the local banking institutions to ensure competitiveness with international banks. Presently, there are eight local banks in the country. BNM licenses and regulates businesses such as commercial banking, investment banking, Islamic banking and money brokering.
Malaysia initiated Islamic banking in August 2006 with the creation of the Malaysian International Islamic Financial Centre (MIFC) initiative and has the aspiration to be an Islamic banking leader. At that time, the government encouraged local banks to enter the Islamic finance market. Concurrently, it allowed foreign Islamic banks to operate in Malaysia. As of June 2017, there are eighteen Islamic local and foreign banks operating in Malaysia. Foreign banks with operations in Malaysia are allowed 100 percent equity participation. Islamic banking is based on Sharia law that disallows the payment of interest in favor of profit-sharing.
Malaysia lowered its economic growth forecast for 2019, and pledged to keep monetary policy accommodative as global risks weigh on the trade-reliant economy. Gross domestic product is expected to increase 4.3 percent to 4.8 percent in 2019, with trade tensions and lower commodity prices among the biggest factors.
The international reserves of Bank Negara Malaysia increased to USD103.5 billion as at April 2019. The reserves level has taken into account the quarterly adjustment for foreign exchange revaluation changes. The reserves position is sufficient to finance 7.7 months of retained imports and is 1.0 time total short-term external debt
Malaysia Market Access Banks