Private banks are restricting the amount of money customers can withdraw each day to prevent bank runs, a bank executive told The Irrawaddy.
“We have to impose limits for fear that reserves may not be sufficient to cover withdrawals,” the executive said, explaining that customers are withdrawing their money but none are making deposits.
Bank customers this week reported that their branches, including branches in Yangon, the country’s commercial capital, had tightened the daily limit for withdrawals. The restrictions on withdrawals followed reports that the junta has been detaining and investigating bankers.
An exporter said corporate customers are avoiding banks. “Business owners and merchants are no longer depositing money in banks … The majority … have chosen to keep their money at home.”
Earlier this month, the junta announced that executives at seven private banks – including Yoma, AYA and UAB – faced administrative action for allowing their banks to exceed the central bank’s limit on the amount of housing loans they can extend.
This announcement shook customers. Since it was made, they have since stopped making new deposits at their bank’s branches out of fear that Myanmar will face another banking crisis. As their trust in banks declined, customers started withdrawing their deposits.
Central bank deputy governor Lin Aung suggested the problem was selfish banks, telling junta media: “They [private banks] should work with us for the sake of the people.”
He also tried to soothe bank customers by saying that the junta-controlled central bank is fully in charge, saying it “supervises deposits and withdrawals at banks daily [so] people do not need to worry about the rumors.”
Bank customers in Myanmar are also reporting that ATM machines are out of cash. The customer of a KBZ branch in the capital, Naypyitaw, said he could not withdraw cash from the bank’s ATMs. “I tried three KBZ ATMs this morning, but couldn’t withdraw any money,” he said.
The junta summoned the leaders and chairpersons of all private banks in the country to Naypyitaw on Wednesday to discuss banking issues.
Aung Lwin Dwe, secretary of the junta’s governing body, the State Administration Council, told them to cooperate with the regime and follow its regulations.
He also urged people not to withdraw large amounts of cash unless necessary and not to believe rumors.
source : irrawaddy