The government of 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 in its continuous efforts and commitment to achieve and maintain a sound and dynamic financial system through continuously implementing appropriate measures and embarking on necessary financial sector reforms in support of the national economic development objectives established Autoriti Monetari Brunei Darussalam (AMBD) on January 1, 2011.
Playing a vital role in the development of the financial sector in Brunei, AMBD is a statutory body. It undertakes several core functions, chief of which is the formulation and implementation of monetary policies, the regulation and supervision of financial institutions as well as currency management.
The four main objectives of AMBD as prescribed under the AMBD Order, 2010 are:
1. To achieve and maintain domestic price stability;
2. To ensure the stability of the financial system, in particular by formulating financial regulations and prudential standards;
3. To assist in the establishment and functioning of efficient payment systems and to oversee them; and
4. To foster and develop a sound and progressive financial services sector.
One of the most important financial policies intro- duced by AMBD to help limit an individual’s total monthly debt obligations and ensure individuals have sufficient disposable income and encourage individuals to manage debt efficiently is the Total Debt Service Ratio (TDSR).
According to AMBD, since the introduction of the TDSR policy in June 2015 and the establishment of the Credit Bureau in 2012, they have observed several positive outcomes, such as the household indebtedness as measured by personal loans (including credit cards) declining by 28.6 per cent from BND2.3 billion in 2010 to BND1.6 billion in 2016.
Prior to the introduction of TDSR in 2015, there were instances where loans were given to customers who had no ability to repay. Household indebtedness also reached a worrying level where 30 per cent of loan applicants earning a net monthly income above BND1,750 had TDSR above 70 per cent. This indicated households were heavily in debt prior to the TDSR policy.
The numbers of loan applicants who are heavily in debt declined to six per cent as of March 2017. Based on the data submitted by finance companies, the number of repossessed motor vehicles has shown a decline of 39 per cent from 2,879 in 2014 to 1,764 in 2016.
Relaxing the TDSR to encourage home property ownership, particularly for borrowers with a net income of BND1,750 and above, from August 10, 2017, local banks and Perbadanan Tabung Amanah Islam Brunei (TAIB) may increase the TDSR Limits from 60 per cent to a maximum of 70 per cent for loans, to finance the purchase or construction of property.
In addition, as of November 7, 2017, local banks were given the flexibility to exceed the maximum 60 per cent of TDSR policy for certain credit facilities that are subject to certain conditions, namely the property charged must be income-generating and not the sole property of the borrower. In addition, the TDSR policy for individuals with a net monthly income of BND10,000 and above will now be subject to the banks’ and finance companies’ internal credit policy. AMBD has also relaxed the limit on banks’ personal loan portfolio, which gives banks more flexibility to extend credit facilities to the household sector.
In line with Brunei Vision 2035, AMBD published the Brunei Darussalam Financial Sector Blueprint 2016-2025 (FSBP) that outlines the framework and measure to develop the financial sector. It identifies five key pillars that form critical components of a sustainable financial ecosystem, including competitive and innovative financial institutions and services.
Awang Yusof bin Haji Abd Rahman, Managing Director of AMBD in a statement said, “In reaching the seventh anniversary of the establishment of AMBD, significant improvements have been seen in the financial sector and we are optimistic that this growth will continue its course. In 2017, AMBD introduced the Secured Transactions Order, 2016, and implemented the Collateral Registry System which has contributed to Brunei’s ranking in Getting Credit for Businesses on the World Bank’s Ease of Doing Business Ranking to second in the world, from 62nd place in 2016. AMBD is constantly reviewing and strengthening our regulations across the financial sector. AMBD has also been active in increasing financial awareness and literacy in Brunei through roadshows to ministries and schools, as well as through our National Savings Day activities.”
He added that, “2017 has been an eventful year. This year marked two significant milestones for Brunei, the Golden Jubilee of His Majesty’s Accession to the Throne and the 50th Anniversary of the Currency Interchangeability Agreement between Brunei and Singapore, both of which inspired our team at AMBD to contribute further to the development of the Brunei economy. Moving forward, AMBD will continue on our course towards improving the financial sector through the Brunei Financial Sector Blueprint to meet our goals for Brunei Vision 2035.”
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