Bank Negara Mulls New Basic Banking Services Policy— 8 Key Things You Need to Know

Bank Negara Malaysia (BNM) has released an Exposure Draft outlining proposed requirements for a new Basic Banking Services (BBS) policy. This draft sets forth expectations that financial service providers (FSPs) must meet to ensure financial consumers can access essential banking services at minimal cost.

Aligned with the vision of the 2nd Financial Inclusion Framework 2023-2026, this initiative aims to enhance the accessibility and inclusiveness of Malaysia’s financial ecosystem, focusing on serving the unserved and underserved segments of the population.

BNM actively seeks written feedback on the proposed requirements, inviting suggestions for areas needing clarification and alternative proposals that could achieve the same intended outcomes.

Stakeholders are encouraged to provide feedback supported by clear rationale, justifications, and supporting data, evidence, analysis, or illustrations to facilitate a comprehensive review of the Exposure Draft.

The Exposure Draft applies to licensed banks (including digital banks), licensed Islamic banks (including Islamic digital banks), and prescribed development financial institutions.

Here are eight key points from the proposed policy that financial consumers and industry stakeholders should be aware of:

Targeted eligibility

The policy defines the eligibility criteria for Basic Banking Services, focusing on vulnerable groups. Eligible individuals now include seniors aged 60 and above, persons with disabilities (PWDs), low-income individuals, full-time students, and those who aren’t digitally savvy or live in areas with poor internet connectivity.

Individuals under 18 and micro enterprises are also eligible for Basic Savings Accounts (BSA), while Basic Current Accounts (BCA) extend to micro and small enterprises.

This targeted approach ensures that those most in need of affordable banking services can access them, addressing the challenges faced by unserved and underserved segments of the population.

Enhanced account features

Basic Savings and Current Accounts will offer more attractive terms under the new policy. Basic Savings Accounts will have a minimum initial deposit not exceeding RM20, a minimum balance not exceeding RM20, and no service fees.

Basic Current Accounts will require a minimum initial deposit not exceeding RM100, with no minimum balance requirement.

However, an RM10 service fee per half-year will apply for Basic Current Accounts with an average balance below RM1,000.

Conventional Basic Savings Accounts must offer a minimum interest rate of 0.25 percent per annum, regardless of balance. Islamic Basic Savings Accounts based on contracts allowing guaranteed returns must also provide a minimum profit rate of 0.25 percent per annum, ensuring a fair return for all Basic Banking Services account holders.

Digital access and essential services

Recognising the importance of digital inclusion, financial service providers must offer free online banking services for basic banking services accounts. These services include account balance enquiries, downloading account statements, viewing transaction history, funds transfers (compliant with the Interoperable Credit Transfer Framework), and intra-bank bill payments.

Basic Banking Services accounts will also come with various free essential services, including debit cards, cash withdrawal services, and monthly statements or passbooks.

These provisions aim to minimise costs for vulnerable consumers while ensuring access to crucial banking functions in both digital and traditional formats.

Transparency and promotion

The policy mandates clear promotion and transparency from financial service providers to ensure that eligible individuals are aware of and can easily access Basic Banking Services.

Financial institutions must promote the availability of basic banking services in their branches and on their websites. They must provide up-to-date information on account features, benefits, eligibility criteria, and application procedures.

Furthermore, financial service providers must ensure their frontline staff are adequately trained to identify eligible consumers, provide proper advice on basic banking services terms and conditions, and guide applicants through the account opening process.

Special provisions for digital banks

The policy acknowledges the unique nature of digital banks, exempting them from certain physical service requirements. While traditional financial service providers must offer over-the-counter and cash-handling services, digital banks are not required.

Instead, they must provide virtual debit cards free of charge to basic banking services account holders.

This approach allows digital banks to maintain their fully digital operating model while still participating in the provision of basic banking services.

Handling of dormant accounts

Clear rules are outlined for managing dormant basic banking services accounts. An account is considered dormant if it has not been operated for one year. Financial service providers are required to close dormant accounts with balances of RM10 or less, absorbing the remaining balance as charges.

Accounts with higher balances may be charged a limited annual service fee of not more than RM10 until the funds become “unclaimed money” under the Unclaimed Moneys Act 1965.

Financial service providers must allow this without imposing any reactivation fees if an eligible customer wishes to reactivate their dormant account before it’s classified as unclaimed money.

Account closure and refusal policies

The policy ensures fair treatment of customers even when accounts are being closed. Financial Service Providers must allow customers to withdraw “to the last sen” when closing their accounts.

While a fee may be imposed for accounts closed within three months of opening, this fee is capped at RM20.

In cases where a financial service provider decides not to allow the opening of a Basic Savings Account or Basic Savings Account for an eligible consumer, they must inform the consumer of the reasons for refusal and provide information on available channels for submitting enquiries or complaints, including the financial service provider’s customer service channel and BNMLINK.

Reporting and self-assessment requirements

To ensure compliance and monitor the policy’s effectiveness, BNM has instituted regular reporting and self-assessment requirements.

Financial Service Providers must submit biannual statistics on basic banking accounts, providing details on the number of accounts, transaction volumes, and other relevant metrics.

Additionally, financial service provider are required to conduct biennial self-assessments on their compliance with the policy requirements. These measures will allow BNM to track the policy’s implementation and its impact on financial inclusion in Malaysia.

This new Basic Banking Services policy represents a significant step towards ensuring that all segments of Malaysian society have access to essential, affordable banking services.

By addressing the specific needs of vulnerable groups and setting clear guidelines for financial service providers, BNM aims to create a more inclusive financial ecosystem that supports the nation’s overall economic development and social well-being.

Featured image credit: Edited from Freepik

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