The Republic of the Union of Myanmar

Central Bank of Myanmar

Notification No. (16/2017)
14th Waxing Day of Waso 1379 ME
July 7, 2017
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In exercise of the powers conferred under Sections 34 and 184 of the Financial Institutions Law, the
Central Bank of Myanmar hereby issues the following Regulations:

1. These Regulations shall be called Capital Adequacy Regulation (CAR).

2. These Regulations shall apply to all banks.

3. Capital Adequacy Ratio is a measure of the amount of a bank’s capital expressed as a

percentage of its risk weighted assets. Banks are required to maintain the Capital Adequacy Ratio as
follows:
(a) Regulatory capital adequacy ratio is 8%;
(b) The minimum Tier I Capital Adequacy Ratio is 4%.
(c) In meeting the capital adequacy ratio, elements of Tier 2 or supplementary capital,
may be included subject to approval of the Central Bank of Myanmar up to a
maximum of 100% of Tier 1 or core capital.

4. A bank may increase its paid up capital by-

(a) amendment to its constituent documents approved by the general meeting of the
shareholders; and
(b) the written approval of the Central Bank of Myanmar.

5. The initial paid-up capital and any subsequent increases in paid up capital must be deposited
at the Central Bank of Myanmar. Subsequent to verification by the Central Bank of Myanmar, the
bank may move the funds to their account.

6. Every bank must report the position of capital and capital adequacy ratio at the end of each
month in the attached form to the Banking Supervision Department of the Central Bank of Myanmar.

7. When a bank’s capital falls below limits as mentioned under above paragraphs 3, the bank
shall present a capital improvement plan to the Banking Supervision Department of the Central Bank
of Myanmar within 30 days of becoming aware of such shortfall.

8. When a bank is under a capital improvement plan it shall not lend, apply for new branches or
carry out any activities which further deteriorate its capital position.

9. Banks are required to meet the minimum capital adequacy ratios in paragraph 3 within six
months from the date of these regulations.

10. After the authorized transition period of six months, if a bank fails to improve its capital
position within three months of the shortfall in its capital, the Central Bank of Myanmar may impose
the administrative action under Section 154 of the Financial Institutions Law.

Capital Adequacy(ENG) 6-7-2017-5

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11. Failure to comply with these Regulations constitute a violation and is subject to corrective
actions or sanctions as may be imposed under section 94 and 96 of the Financial Institutions Law and
administrative penalties under section 154 of the said Law.

12. Following instructions are hereby repealed:

(a) The Central Bank of Myanmar Instruction No.1 dated August 4, 1992;
(b) The Central Bank of Myanmar Instruction No.5 dated January 12, 1995;
(c) The Central Bank of Myanmar Instruction No.19 dated April 30, 2003;
(d) The Central Bank of Myanmar Memorandum No. MaBaBa- BS-49 dated December
3, 2007;
(e) The Central Bank of Myanmar Instruction No. 8/2011 dated December 14, 2011;
(f) The Central Bank of Myanmar Memorandum No. 1590/982-kaka (1)/ 2012-2013
dated March 5, 2013.

13. These Regulations shall come into effect immediately.

Sd./xxxxxxxx
(Kyaw Kyaw Maung)
Governor
 Attachment

Capital Adequacy Form

Central Bank of Myanmar
Banking Supervision Department
Capital Adequacy Worksheet
Bank Name:
Bank Code No:
Date/Period

Tier 1 (Core) Capital: Thousands of Kyat

1 Total equity capital -

1a Paid in Capital (Common Stock) -
1b Perpetual non-cumulative preference shares
1c Surplus
1d Retained Earnings
1e Statutory Reserves -
1f Capital Grants
Minus:
1g Profit & Loss of Current Year if negative
1h Intangible Assets
1i Net Deferred Tax Assets
1j Pre-operating expenses
1k Related party lending
1l Total Tier 1 (Core) Capital

2 Tier 2 (Supplementary) Capital:

2a General loan loss reserve on credit(1.25% of total risk weight asset)
2b Revaluation Reserves on Fixed Assets -
2c Cumulative Foreign Exchange Translation Adjustment
2d Profit/Loss of Current Year (if positive) -
2e Total Tier 2 (Supplementary) Capital
-
3 Allowable Portion of Tier 2 (Supplementary) Capital -

4 Deducted Equity Investments -

5 Regulatory Capital = Tier 1 + Allowable Tier 2 – Deducted Equity

Investments

Risk-Weight Categories
6 0% risk weight:
6a Cash in Kyat and Fully-convertible Foreign Currencies
6b Direct Claims on Central Banks and Central Governments of OECD
Member Countries
6c Direct Claims on CBM -
6d Loans Collateralized by Blocked Deposits -
6e Direct Claims on Government Securities
Capital Adequacy(Attachment)ENG
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6f Total -
6g 0% Risk-Weight Total (Above Total 6f x 0%) 0

7 20% risk weight

7a Loans Collateralized by Claims on Central Banks and Central
Governments of OECD Member Countries
7b Direct Claims on Banks Licensed in OECD Member Countries
7c Short-term Claims on Banks Licensed In Non- OECD Member
Countries
7d Loans Collateralized by Claims on or Guaranteed by Multilateral
Lending Institutions
7e Cash Items in Process of Collection -
7f Total
7g 20% Risk-Weight Total (Above Total x 20%)

8 50% risk weight

8a Qualifying Residential Mortgage Loans -
8b Total -
8c 50% Risk-Weight Total (Above Total x 50%) -

9 100% risk weight -

9a All Other Assets -
9b Minus: Intangible Assets -
9c Net Deferred Tax Assets -
9d Pre operating expenses
9e Deducted Equity Investments -
9f Equals: Total -
9g 100% Risk-Weight Total (Above Total x 100%) -

10 Off-balance-sheet items with 0% Credit Conversion Factor

10a Unused Portions of Commitments with Original Maturity of 1 Year or
Less
10b Unused Portions of Commitments that are unconditionally cancelable
10c Total -
10d 0% Credit Conversion Factor Total (Above Total x 0%) -

11 Off-balance-sheet items with 20% Credit Conversion Factor

11a Commercial Letters of Credit
11a(i) 0 % Risk Weight -
11a (ii) 20% Risk Weight -
11a (iii) 50% Risk Weight -
11a (iv) 100% Risk Weight -
11b Total -
11c Risk-Weighted Total -
11d 20% Credit Conversion Factor Total (Risk-Weighted Total x 20%)
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12 Off-balance sheet items with 100% Credit Conversion Factor

12a Guarantees and Standby Letters of Credit
12a(i) 0 % Risk Weight -
12a(ii) 20% Risk Weight -
12a(iii) 50% Risk Weight -
12a(iv) 100% Risk Weight -
12b Total -
12c Risk-Weighted Total -
12d Others
12d(i) 0 % Risk Weight -
12d(ii) 20% Risk Weight -
12d(iii) 50% Risk Weight -
12d(iv) 100% Risk Weight -
12e Total -
12f Risk-Weighted Total -
12g 100% Credit Conversion Factor Total (Risk-Weighted Totals x 100%)

13 Total Risk-Weighted Assets

14 Tier 1 Capital Ratio %

(Tier 1 Capital as % of Total Risk-Weighted Assets)

15 Regulatory Capital Ratio %

(Regulatory Capital as % of Total Risk-Weighted Assets)