2019 13 June

Myanmar Legal Update: New Set of Interest Rates for Microfinance Institutions


Among recent developments happening in the banking and finance sector, the Microfinance Business Supervisory Committee (“MBSC”) issued Directive 1/2019 (the “Directive”). This Directive lays down a new set of interest rates which shall be followed by all microfinance institutions operating in Myanmar.

Under the new Directive, the interest rate for microfinance loans shall be charged at a rate of 2.30% per month but shall not exceed 28% per year and would be calculated using an effective rate.

The interest rate for compulsory savings as prescribed by the Directive shall be 1.20% per month but shall not be lower than 14% per year, whereas the interest rate for voluntary savings shall be 0.8% per month but shall not be lower than 10% per year.

The MBSC has further stated that for collectables such as fees on loan services, banking services, digital financial services, social welfare, life insurance, membership fees, charges for books and documents, and prepayment service charges, the following shall apply:

  • The total collectable fees and charges for loans having a term of 12 months shall not exceed 2% of the loan amount; and
  • The total collectable fees and charges for loans with any term less than or exceeding 12 months shall be calculated based on 2% of the loan amount for one year as per the relevant loan period.

This Directive supersedes and replaces all other previous directives, namely those of 2011, 2014 and 2016 which concern interest rates on savings and loans.

While this Directive sets new interest rates, we observe that the Directive came into force on 1 June 2019 but was only published on 5 June 2019. Microfinance institutions which conducted transactions in accordance with the previous interest rates from 1 June 2019 till 4 June 2019 would therefore be in default of this Directive. Given this uncertainty, we expect that the MBSC will issue additional guidance to microfinance institutions in the near future to clarify its position.

DFDL Contacts

William D. Greenlee, Jr.

Partner, Managing Director

DFDL Myanmar


Rohan Bishayee

Legal Adviser

DFDL Myanmar


The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.

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