Malaysia‘s central bank plans to issue up to five licences to new online banks offering either conventional or Islamic banking under a proposed licensing framework set to be finalised next year.
In a draft proposal issued on Friday, the central bank said the new framework would allow for internet-based banking products and services that could address gaps in the market for potential underserved and unserved customers. The new lenders will have access to the country’s shared ATM network.
The move by Bank Negara Malaysia (BNM) comes as regulators across Asia opening up banking sectors to new digital players using technology to offer financial services.
“Such digital banks are expected to offer meaningful access to and promote responsible usage of suitable and affordable financial solutions to financial consumers,” BNM said in a statement.
According to the draft proposal, “Preference will be accorded to an application where the controlling equity interest in the proposed licensed digital bank resides with Malaysians.”
The banks would also need to demonstrate their viability in the first three to five years of operations, with an asset threshold of not more than 2 billion ringgit ($484.4 million) during the period.
The central bank will finalise its policy document on the new lenders during the first half of 2020 after gathering feedback on the proposed framework. Applications for licences would be opened after the policy document is issued.