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Myanmar’s banking system has nearly collapsed following the Feb. 1 military coup, with the country’s Central Bank and private banks seeing fewer deposits made and more money being taken out in withdrawals, sources in the country say.
The Central Bank has also had trouble disbursing enough funds to private banks to cover amounts being withdrawn for account-holders’ daily needs, sources say.
Three months after the military coup, private banks are now limiting the amounts of money allowed for withdrawals at ATMs, with limits set at 200,000 (US $128) to 300,000 kyat per customer per day, while before the coup, about 1 million kyat could be withdrawn each day.
Now, some cannot even take out the lower amount, with ATMs running out of cash. Hundreds of people can be seen waiting in lines every day to get their money from the banks.
“Nobody is depositing money in the banks anymore. They’re just taking it out,” one private bank official told RFA’s Myanmar Service.
“Business owners who deal with tens of thousands in cash are not putting their money in the banks anymore because of security concerns, and the banks are running out of bank notes as a result,” the official said, speaking on condition of anonymity.
Following the coup, Myanmar’s Central Bank told account holders not to worry—that it had enough money to cover withdrawals, the bank official said.
“But in reality, the amounts they gave to the banks gradually declined, with disbursements coming every three days and sometimes only once a week,” he said.
“So the banks could not supply the ATMs with enough cash, and when they began to set limits, people lost their trust and began to withdraw their money out of fear.”
Calls seeking comment from Win Thaw, deputy chairman of the Central Bank, received no response this week.
Speaking on May 7 at a press conference held by the military’s ruling State Administration Council, Win Thaw said that Myanmar citizens can still make deposits in the banks with confidence, adding, “They can trust their money in the banks.”
“People can work together to get the banking system up and running, and we will oversee the banks to make deposits and withdrawals run as smooth as possible,” he said.
‘The doors were closed’
In Yangon, Mandalay, and other cities across the country, bank customers still face obstacles when trying to make withdrawals, sources say.
“When I went to ask about withdrawals, the doors were closed,” one Yangon resident said.
“Security staff said I would have to make an appointment online if I want to withdraw money. You can’t even withdraw your own money. It’s hard even to get the 200,000 kyat anymore,” he said.
In Sittwe, the capital of Rakhine state, only 50 people are allowed each day to take money from their accounts at CB Bank, city resident San Shwe Kyaw said, adding that the withdrawals can be made only in small amounts.
“The bank allows only 50 people each day to make withdrawals, and they give us a number to show when we stand in line,” he said.
Banks closed in Myanmar after Feb. 1 when many private bank employees joined the Civil Disobedience Movement (CDM) of anti-junta work stoppages by white-collar workers, and though some have now reopened, few are functioning normally.
It is becoming increasingly common now for customers trying to make withdrawals to pay a percentage of their funds to third parties able to make the withdrawals for them through their own accounts, sources say.
Business owners dealing with large sums of money also face major banking and withdrawal problems.
“As a businessman, I don’t have time to line up every day and night like the others, and sometimes I have to pay a certain percentage extra to get my money from someone outside,” a trader in Muse, on the border with China, said, while a businessman in Lashio in northern Shan state said that even though he has money in his bank, it can’t be withdrawn.
“So we have to transfer money to Yangon through the banks that accept online payments,” he said.
Myanmar’s banking system is resilient, though, and won’t collapse easily, said businessman Soe Tun, adding that more than 50 banks are in business in the country.
“Of these, 20 are licensed foreign banks, and international banks are unlikely to collapse,” he said, adding, “There are four government banks, and these will also not easily collapse.”
“The massive queues at the ATMs are being seen only at three banks—the Kanbawza, Irrawaddy, and CB Bank. And these banks won’t collapse just by giving out 200,000 kyat to each customer,” he said.
On April 28, the State Administration Council (SAC) restored online financial systems using mobile internet lines, which were cut on March 15 to curb opposition to the military coup, but this does not seem to have allayed public concern, sources say.
‘People have lost trust’
Myanmar’s current banking and financial crisis has been caused only by the actions of the SAC now ruling the country, said Tin Tun Naing, Minister of Finance and Foreign Investment in Myanmar’s opposition shadow government, the National Unity Government (NUG).
“People have lost trust in the banks, and this breach of trust has been caused by the military council,” he said, referring to the SAC by another name.
“Now, banks are trying to lure people with incentives called Special Accounts or Flexible Accounts, and some are saying they will even pay 6 percent interest on deposits, while others are saying they will pay as much as 8 percent.”
But now account holders can’t even withdraw the money they’ve put in, Tin Tun Naing said.
“So how can they believe the banks, or even the Central Bank? Who will take responsibility if they back out on their promises?” he asked.
A drop in the value of Myanmar’s currency has meanwhile led to higher commodity prices, with the exchange rate rising from 1,300 kyat per U.S. dollar on Feb. 1 to 1,618 kyat per U.S. dollar on May 12, according to Central Bank figures.
Reported by RFA’s Myanmar Service. Translated by Khin Maung Nyane. Written in English by Richard Finney.
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