Regulation for Farmer Development Bank

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Union of Myanmar Central Bank Notification / Order No. 3/2014 Date: 1376 ME, Wakkhaung Month, 4th day (2014 AD, July 30)

Pursuant to Section 91(b) of the 1990 Union of Myanmar Financial Institutions Act, and in exercise of the powers conferred therein, the Union of Myanmar Central Bank hereby promulgates the following regulations:

Chapter 1: Name and Definitions

1. These regulations shall be known as the Farmer Development Bank Establishment License Regulations.
2. The terms used in these regulations shall carry the meanings assigned to them under the Union of Myanmar Central Bank Act and the 1990 Union of Myanmar Financial Institutions Act. In addition, the following terms shall carry the meanings specified below: (a) "Farmer Development Bank" refers to a bank established within Myanmar with capital contributions from the State, Regions, States, private banks, and the public, to promote agricultural development by providing seasonal loans and financial assistance to farmers and rural residents. (b) "Banking License" refers to the license issued by the Union of Myanmar Central Bank permitting the Farmer Development Bank to conduct banking operations.

Chapter 2: Purpose

3. The primary purpose of the Farmer Development Bank is to promote agricultural development in relevant Regions, States, or Provinces, and to protect and improve the living standards and interests of farmers residing in those areas by providing seasonal loans and financial services.

Chapter 3: Establishment

4. The Farmer Development Bank shall be established as a public limited company in accordance with the provisions of the 1990 Union of Myanmar Financial Institutions Act.
5. The Farmer Development Bank shall be established as a legal entity with the right to sue and be sued, and to conduct business under its registered name.
6. (a) The head office of the Farmer Development Bank shall be located in the capital city of the relevant Region, State, or Province. (b) If branch offices are opened, permission must be obtained from the relevant Region/State/Province administration and submitted to the Central Bank.

Chapter 4: Obtaining Banking License

7. To establish the Farmer Development Bank and obtain a banking license, the following documents and supporting evidence must be submitted to the Central Bank in accordance with its prescribed forms: (a) Business plan, (b) Feasibility study report, (c) Partnership records and partnership regulations, (d) Organizational structure chart and list of major shareholders, (e) Banking activity agreement signed by all directors, (f) Statement on the availability of financial resources.
8. The Central Bank shall process and issue or reject the banking license application within three months of receipt.
9. The Farmer Development Bank must commence banking operations within one year from the date of license issuance. If operations do not commence within this period, the Central Bank may revoke the license.
10. The Farmer Development Bank must conduct branch openings, location transfers, and closures in accordance with the Central Bank's permissions.

Chapter 5: Capital and Profit Distribution

11. (a) The minimum paid-up capital for establishing the Farmer Development Bank shall be 20,000 million kyats. Each share is valued at 10,000 kyats, with a total of 2 million ordinary shares. (b) The State's initial capital contribution shall be 10,000 million kyats, with additional contributions permitted. (c) The authorized capital may be increased as needed, subject to Central Bank approval and existing laws.
12. The Farmer Development Bank shall distribute a portion of its annual net profits, as determined by the Board of Directors, to shareholders.

Chapter 6: Establishment of Funds

13. The Farmer Development Bank shall establish a general reserve fund. A portion of the annual net profit, as determined by the Central Bank, shall be allocated to this fund.
14. A special reserve fund shall also be established for uncollectible loans and doubtful debts. A portion of the annual net profit, as determined by the Board of Directors, shall be allocated to this special fund.
15. A development fund may be established through annual profit allocations, domestic and foreign donations, or government subsidies.
16. The development fund may be invested in long-term bonds and securities, subject to Board of Directors' approval.

Chapter 7: Transfer and Sale of Shares

17. Shareholders, including initial contributors, may transfer or sell their shares to individuals and licensed banks. Significant share transfers must comply with the 1990 Union of Myanmar Financial Institutions Act and require Central Bank approval.

Chapter 8: Permitted Banking Activities

18. The Farmer Development Bank is authorized to conduct the following banking activities: (a) Providing seasonal, short-term, medium-term, long-term loans, and overdraft facilities to individual farmers, farmer groups, and organizations; (b) Opening deposit and savings accounts for customers; (c) Domestic and international money transfers; (d) Borrowing from domestic and foreign sources as deemed appropriate; (e) Providing secured and unsecured loans, and overdraft facilities under the credit system; (f) Providing financial assistance to promote agricultural products and other crop markets; (g) Offering financial services to improve farmers' living standards; (h) Providing loans to agricultural laborers and rural residents; (i) Accepting movable and immovable agricultural/fishery assets as collateral, with the right to sell them; (j) Providing other financial services permitted by the Central Bank.

Chapter 9: Management

19. (a) The Farmer Development Bank shall be managed by a Board of Directors. (b) The Board shall consist of 7 to 11 members, including: (1) 3 to 5 state-appointed members; (2) Members elected by shareholders.
20. (a) The State may appoint up to 5 members, including the Chairman, provided they hold at least 50% of the bank's shares. (b) If holding less than 50%, state-appointed members shall vote according to their shareholding, similar to other shareholders. (c) If no Chairman is appointed by the State, members shall elect one from among themselves. (d) The Chairman's term is five years; other members serve three-year terms.
21. State-appointed directors are appointed by the Chief Minister of the relevant Region/State to manage the Farmer Development Bank.
22. The following persons may serve as major shareholders, directors, or management committee members: (a) Individuals convicted of criminal offenses domestically or abroad; (b) Persons involved in violations of banking and corporate laws; (c) Persons lacking capacity to conduct banking operations; (d) Individuals on the bankruptcy register.

Chapter 10: Borrowing

23. The Farmer Development Bank may obtain financial resources domestically and abroad through: (a) Loans from the State, subject to Union Government approval and prescribed conditions; (b) Loans from Regions/States, subject to local administration recommendations and Central Bank permissions; (c) Loans from foreign states or institutions, subject to Central Bank approval.

Chapter 11: Accounting and Record Keeping

24. The Farmer Development Bank shall: (a) Maintain financial records, receivables, payables, and other accounts in accordance with international accounting standards, submitting reports to the Central Bank at prescribed intervals; (b) Preserve accounting records for at least five years from the date of transaction. Records older than five years may be destroyed with Central Bank permission.

Chapter 12: Auditing and Reporting

25. As a state-majority shareholder bank, the Farmer Development Bank shall appoint auditors in accordance with Section 145(a) of the Myanmar Companies Act.
26. Audit reports and balance sheets for each fiscal year shall be published for public access.
27. Auditors appointed by or auditing the Central Bank may examine the Farmer Development Bank, including: (a) Financial statements, documents, and books; (b) Information related to organizational structure and operations, with access to relevant supervisors, managers, lawyers, and staff.
28. The bank may establish an audit committee with three shareholder-appointed members: (a) To verify compliance with applicable laws and report necessary matters; (b) To provide opinions on issues submitted by the Board of Directors.
29. The audit committee shall meet at least once every three months, with special meetings as needed. All members must attend, and decisions shall be made by majority vote.
30. The Board of Directors may appoint or hire external experts to assist the audit committee per Section 29.

Chapter 13: Conditions for Loans to Related Parties

31. In accordance with the 1990 Union of Myanmar Financial Institutions Act, loans may be extended to major shareholders, directors, employees, and their spouses, parents, and children, provided the loans are commercially viable or closely related.

Chapter 14: Obligations for Compliance

32. The Farmer Development Bank shall comply with the following: (a) Submit loan programs and implementation policies to the Central Bank within six months of operation, and notify any policy changes; (b) Maintain risk management, financial accounting, and computerized information systems; (c) Set fees and charges in accordance with Central Bank guidelines; (d) Maintain internal audit, undergo external audits, and submit annual internal/external audit reports within three months of fiscal year-end. The Central Bank may extend deadlines for exceptional cases; (e) Establish reliable information channels to support financial services and risk mitigation; (f) Maintain confidentiality of customer business and personal data obtained by management and staff.

Chapter 15: Winding Up

33. The Farmer Development Bank shall wind up voluntarily, compulsorily, or through bankruptcy in accordance with existing laws.

Chapter 16: General Provisions

34. The Farmer Development Bank shall be subject to Central Bank supervision and inspection.
35. The bank shall comply with the 1990 Union of Myanmar Financial Institutions Act, other financial laws, anti-money laundering acts, and any rules, orders, or directives issued by the Central Bank.

(Seal) Chairman Union of Myanmar Central Bank