Bank Negara, which is the central bank of Malaysia, today laid down the proposed licensing frameworks for virtual banks in the country. According to reports, the central bank is prepared to issue as many as five licenses for new virtual banks.
It is believed that entities that are awarded licenses will be allowed to create digital banks for either conventional banking or Islamic banking. The new frameworks aim to welcome those entities into space that are willing to work in a market that is still at a nascent stage.
Additionally, the central bank will also be looking for a definite path to profitability for digital banks. The ultimate aim of the Bank Negara is to ensure that the establishment of such digital banks leads to greater financial inclusion in Malaysia.
Digital banks have the potential of providing a large pool of consumers with cheap financial solutions and it is believed that it could have a major impact on the Malaysian financial system as well. The Malaysian central bank has also stated that the well being of the country’s financial system and its consumers will also be a major factor in the licensing process.