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Borneo Bulletin Yearbook 2019
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
together:
• 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.
Total Debt Service Ratio
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,
AUTORITI MONETARI BRUNEI DARUSSALAM (AMBD)