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Minimum capital funds requirements introduced for banks 

May 4, 2017

Ahmad Naqib Idris, Edge markets

Effective yesterday, banks and investment banks are no longer required to maintain a reserve fund. Instead, they must maintain a set minimum amount of capital funds at all times.

“Minimum capital funds requirements are introduced as an important entry and ongoing requirements to ensure a banking institution maintains a minimum size of capital to operate and perform its intermediation function effectively,” said Bank Negara Malaysia (BNM) in its policy document on capital funds.

Under the new requirements, a licensed locally incorporated foreign bank is required to have a minimum of RM300 million in capital funds, which is the sum of paid-up ordinary shares, preference shares, irredeemable convertible unsecured loan stock, retained earnings and other disclosed reserves.

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