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Exposure Draft on Net Stable Funding Ratio

Release Date: 28 Sep 2017

Bank Negara Malaysia issued today the exposure draft on Net Stable Funding Ratio (NSFR) for banking institutions. The NSFR is a liquidity standard published by the Basel Committee for Banking Supervision which forms part of the Basel III regulatory reforms. The NSFR requires banking institutions to maintain a stable funding profile in relation to the composition of their assets and off-balance sheet activities. This standard complements the Liquidity Coverage Ratio (LCR) which has been phased in since 2015.

The Bank intends to implement the NSFR at no earlier than 1 January 2019. The Bank is cognisant that, at the global level, there is considerable uncertainty in the implementation schedule and divergence from the internationally agreed timeline of 1 January 2018. In deciding the implementation schedule of NSFR, the Bank takes into account the international nature of Malaysian banking institutions and the operational requirements of banking institutions in meeting the NSFR standard, as well as the need to ensure the smooth functioning of intermediation process.

The Malaysian banking system remains resilient. Supported by strong liquid asset buffers, more diversified funding profiles and robust liquidity risk management practices, banking institutions have sufficient safeguards in managing liquidity risk. As at 30 June 2017, the banking system LCR stood at 141% whilst the system NSFR is estimated at above 100%.

The Bank invites public feedback on the proposed regulatory requirements for NSFR. Banking institutions have two months to submit feedback to the exposure draft. Responses must be submitted to the Bank by 27 November 2017 to pfpconsult@bnm.gov.my. Further details can be found in the following documents:

© Bank Negara Malaysia, 2017. All rights reserved.