The Autoriti Monetari Brunei Darussalam Order, 2010 commenced on January 1, 2011 following His Majesty Sultan Haji Hassanal Bolkiah Mu’izzaddin Waddaulah ibni Al-Marhum Sultan Haji Omar ‘Ali Saifuddien Sa’adul Khairi Waddien, Sultan and Yang Di-Pertuan of Brunei Darussalam’s consent. The Autoriti Monetari Brunei Darussalam Order, 2010, among other things, provides for the establishment of Autoriti Monetari Brunei Darussalam (AMBD).
AMBD is a statutory body, acting as the central bank of Brunei. They undertake several core functions: formulation and implementation of monetary policies, regulation and supervision of financial institutions as well as currency management. AMBD was formed to maintain a sustainable financial ecosystem made up of competitive and innovative financial institutions and services.
To form AMBD, four divisions which were previously under the Ministry of Finance merged
• The Financial Institutions Division
• The Brunei Currency and Monetary Board
• The Brunei International Financial Center
• Part of the Research and International Division
There are four main objectives of AMBD as prescribed under the AMBD Order, 2010:
• To achieve and maintain domestic price stability.
• To ensure the stability of the financial system, in particular by formulating financial regulations and prudential standards.
• To assist in the establishment and functioning of efficient payment systems and to oversee them.
• To foster and develop a sound and progressive financial services sector.
Since the establishment of AMBD in 2011, AMBD has made great strides in developing the domestic financial market infrastructure including the introduction of the Real-Time Gross Settlement system in 2014, the Automated Clearing House in 2016 and the Central Securities Depository in 2017.
To limit an individual’s total monthly debt obligations, AMBD introduced Total Debt Service Ratio (TDSR). This ensures individuals have sufficient disposable income and encourages individuals to manage debt efficiently.
Since the introduction of the TDSR policy in June 2015, the household indebtedness, as measured by personal loans (including credit cards), declined by 30.4 per cent from 2010 to 2017. The ratio of “bad loans” to total loans in the household sector, as indicated by the Non-Performing Loan Ratio (NPL) also declined from 2.3 per cent in December 2014 to 1.9 per cent in June 2017. These outcomes suggest improved debt management.
Effective as of June 2015, AMBD set the maximum TDSR at 60 per cent for borrowers with a minimum net monthly income of BND1,750. Borrowers with a net monthly income below BND1,750 are subjected to the respective financial institution’s internal policy on TDSR or minimum take home pay requirement.
The TDSR limits how much individuals can borrow relative to their income, protecting individuals from falling into a debt trap. From June 2015 until June 2017, banks and finance companies received 119,467 retail loans and financing applications. Only 2.7 per cent of these applications were declined due to borrowers exceeding their TDSR, highlighting the low rejection rate. Meanwhile, 75 per cent were reported to have TDSR of less than 60 per cent.
In October 2015, AMBD increased the flexibility of the TDSR policy, particularly for business owners, to include variable income such as rental and other business income as part of their Gross Monthly Income subject to certain conditions.
In 2017, AMBD reviewed the TDSR framework, increasing its limit to a maximum of 70 per cent. As of August 2017, all banks and Perbadanan Tabung Amanah Islam Brunei may increase the TDSR limit from 60 per cent to 70 per cent. AMBD announced the amendment after receiving feedback that the TDSR framework limited some customers’ capabilities to get property financing.
The new TDSR amendment is for credit facilities to finance the purchase or construction of properties only. With this new amendment, AMBD aims to encourage home ownership, particularly for borrowers with a net monthly income of BND1,750 and above, and to have wider options in making home purchases. AMBD also aims to stimulate the domestic property market through increased bank lending, which can contribute to economic growth, in line towards realising Brunei Vision 2035.
As the regulator and supervisor of the financial sector, AMBD continues to monitor the effectiveness of its regulations to ensure that they are in line with the current economic and market environment.
In line with Brunei Vision 2035, AMBD published the Brunei Darussalam Financial Sector Blueprint (FSBP) 2016 – 2025. The FSBP guides the development of Brunei’s financial sector. AMBD will work with ministries and stakeholders to reach the objectives of Brunei Vision 2035.
The Brunei Association of Banks (BAB) praised the FSBP published by AMBD. On behalf of BAB members, Managing Director of BIBD and Chairman of BAB Mubashar H Khokhar said, “It is indeed reassuring to witness a complete and thorough reflection of the vision for the financial sector of Brunei as engendered by The Financial Sector Blueprint. The BAB holds this initiative in great respect and is fully aligned to and supportive of its policy framework, initiatives and recommendations. This indeed provides a complete framework for the progress of the financial sector, and BAB and its members are committed to seeking guidance from it for the future.”
Usage of online and mobile payments is growing rapidly in Brunei. Between 2016 and 2017, there was a 135 per cent increase in mobile application banking. A similar figure was recorded for Internet banking, while card usage recorded a 33 per cent increase.
In December 2018, AMBD announced they had developed the Digital Payment Roadmap for Brunei 2019-2025. This development is part of AMBD’s initiatives to grow the digital payment industry in Brunei.
The roadmap sets out key strategies towards a ‘Digital Payment Nation,’ in line with the Financial Sector Blueprint 2016-2025 and Brunei Vision 2035’s aspiration towards a dynamic and diversified economy.
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