Depositors rush to ATMs as top bankers meet with junta in Naypyitaw

The Myanmar junta summoned banking magnates to Myanmar’s capital on Wednesday as news spread of new scrutiny and restrictions the country’s financial institutions and crowds in Yangon hurried to withdraw funds from their accounts. The discussion between regime officials and bank executives reportedly focused on the growing number of non-performing loans (NPLs) on Myanmar banks’ balance sheets, their diminishing cash reserves, and the security of bank branches in areas of the country threatened or controlled by anti-junta armed groups, according to a source with knowledge of the matter. The source said that among the regime officials leading the meeting was Lt-Gen Aung Lin Dwe, secretary of the State Administration Council, the name the junta uses for itself. Officials from the junta’s Ministry of Home Affairs and the chair of the Central Bank of Myanmar (CBM) also reportedly attended. The bank executives present at the meeting included Zaw Zaw, the founder and chair of AYA Bank, and Aung Ko Win, who owns the controlling shares of KBZ Bank along with his family, according to the same source. Banks under growing pressure Saddled with myriad restrictions imposed since the military coup of 2021, bankers are pushing for less strict oversight by junta authorities including a relaxation of existing cash reserve requirements, a source connected with the banking sector told Myanmar Now. “During this crisis, the CBM wants to reduce the use of cash and push for cashless and digital banking instead. Limitations like this can harm people’s trust in the banks,” he said. The assets deposited in Myanmar banks have shrunk substantially amid the political instability and poor economic conditions that have emerged under the military regime, while the amount of funds lent out in NPLs—loans that borrowers have failed to repay on schedule—has risen at a worrying rate. Attempting to address these challenges, the CBM has floated the implementation of a “pool” banking system, which would reallocate cash to banks struggling to meet the required reserve ratios, a Myanmar economist said. “Instead of working individually, the discussion was about the banks cooperating with one another. I think it’s a practical plan for the current situation,” he added. Some top bankers were notably not in attendance, according to Myanmar Now’s sources, including Serge Pun, the owner of Yoma Bank, and Khin Maung Aye—the chair of Myanmar’s CB Bank and the Myanmar Banks Association—who reportedly lives overseas. Myanmar Now was not able to verify these claims independently. The junta-run CBM announced at the beginning of July that it intended to take punitive action against seven private banks for issuing housing loans in excess of the allowed limit. The institutions named in the announcement were Yoma Bank; the Construction, Housing and Infrastructure Development Bank; Myanmar Citizens Bank; UAB Bank; Ayeyarwady Bank; the Small and Medium Enterprises Development Bank; and Myanmar Metro Bank. Junta authorities have reportedly been holding the owner of Yoma Bank and one of Myanmar’s wealthiest tycoons, Serge Pun—also known as Theim Wai—for questioning in Naypyitaw for several weeks, later naming the bank as among those that had exceeded the CBM’s lending limits. They initially summoned him along with eight other associates of the Yoma Group for suspected involvement in an alleged scheme to sell condominiums in Thailand on an instalment plan. A Yoma Group spokesperson denied that they were connected to any real estate deals outside of Myanmar. Aiming to control rampant inflation, the regime has also detained rice and gold merchants, foreign currency exchange agents and other businessmen. Customers hurry to make withdrawals On July 10, large crowds were also seen waiting to withdraw money at bank branches and cash machines in Yangon’s largest shopping centres. Customers queue up to make withdrawals at bank branches and ATMs in Yangon in July 2024 (Photo: Ko Kan Kaung/Myanmar Now) By the afternoon, signs had appeared on most ATMs in Yangon’s busiest areas saying “Out of service due to maintenance.” On July 1, the same day the CBM announced that it was targeting major banks for breaching requirements, it placed restrictions on bank withdrawals throughout Myanmar, recalling similar actions soon after the February 2021 coup that prompted account holders to rush to the banks en masse to withdraw funds. After the coup, private banks began to advertise the option of “special” accounts with unlimited withdrawals, but these accounts are now subject to the same CBM restrictions. According to account holders, withdrawals are now limited to a maximum of one million kyat (US $308). Previous restrictions on cash withdrawals and the alarming depreciation of the kyat have prompted masses of bank customers in Myanmar to rush to withdraw funds from their accounts before. A cash machine after going out of service in Yangon. Accountholders rushed to withdraw funds after transaction limits were announced in July 2024. (Photo: Ko Kan Kaung/Myanmar Now) Rather than keep cash savings in the banks, many choose to invest in assets such as real estate, gold, United States dollars, or cars that are more likely to maintain their value or serve a profitable purpose. Myanmar’s economy has recovered slowly and haltingly since the dramatic contraction that followed the 2021 military coup, dragged down by depressed consumer demand and rising prices for fuel and raw materials leading to prohibitive production costs. Businesses throughout the country are suffering losses or suspending operations. The junta’s leader Sen-Gen Min Aung Hlaing typically treats the country’s economic troubles as overstated and expresses confidence that further efforts will boost growth, claims he reiterated at a meeting in Naypyitaw in June.

Depositors rush to ATMs as top bankers meet with junta in Naypyitaw

Hoping to avert a brewing crisis, regime officials met with the heads of major banks as anxious account holders formed long queues to withdraw money at bank branches and cash machines in Myanmar’s commercial hub

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