Overview of Financial Inclusion in Malaysia
Financial inclusion, the provision of suitable, affordable and quality financial services to all segments of society contributes to balanced as well as sustainable economic growth and development. The primary function of Bank Negara Malaysia in promoting a sound, progressive and inclusive financial sector is articulated in the Central Bank of Malaysia Act 2009 further reinforced Bank Negara Malaysia's strategic focus on driving financial inclusion policies. In advancing the financial inclusion mandate, a holistic framework has been formulated within BNM's Financial Sector Blueprint (FSBP) 2011-2020 to improve the overall well-being of communities on the aspects of convenient accessibility, high take-up, responsible usage and high satisfaction of financial services.
The vision of the financial inclusion framework is to create an inclusive financial system that best serves all members of society, particularly the underserved, to have access to and usage of quality, affordable essential financial services to satisfy their needs towards greater shared prosperity. This achievements of the vision is measured through the desired outcomes for customers, which are convenient accessibility, high take-up, responsible usage and high satisfaction of financial services.
Holistic Framework to Further Financial Inclusion
The FSBP has identified 10 key action plans based on the strategic outcomes of innovative channels and products and services, empowering the underserved with financial knowledge and strengthening the financial institutions and infrastructure. These action plans are currently being implemented and are at various stages of completion.
For more information, view the following publication:
On the international front, Bank Negara Malaysia continues to be a strong advocate of inclusive financial development:
1. Alliance for Financial Inclusion
- AFI is a global network, with headquarters in Malaysia, of policymakers comprising more than 120 member institutions with the aim of making financial services more accessible to the world’s 2 billion unbanked people.
- In collaboration with AFI, Bank Negara Malaysia undertakes key roles to promote and advocate financial inclusion policies in key policy areas i.e. global standards and proportionate regulation, consumer empowerment and market conduct, financial inclusion data and national strategy, digital financial services and SME finance.
- Bank Negara Malaysia has also committed a set of measurable financial inclusion commitments to advance the goal of reaching this unbanked people through the Maya Declaration which is the AFI Network’s commitment to financial inclusion.
- Recognising the importance of measurements in translating policies into real impact, Bank Negara Malaysia also adopted the Sasana Accord during the AFI Global Policy Forum 2013 in Kuala Lumpur, and developed a set of key performance indicators and a financial inclusion index to track the progress and estimate the impact of policies in order to intensify the outreach of the financial products and services.
- In May 2015, Bank Negara Malaysia had also collaborated with AFI and the Toronto Centre to host the Global Symposium themed “Towards Proportionality in Practice”, culminating in the KL Resolution on Proportionality in Practice. Click here to view the commitments under the KL Resolution.
- During the AFI Global Policy Forum 2015 in Maputo, Mozambique, AFI members adopted the Maputo Accord, which introduces SME finance as a new focus area of the Maya Declaration. As the primary driver of economic growth, employment, innovation, and women’s empowerment in many developing countries, SMEs face major challenges in accessing finance. The Maputo Accord provides a concrete framework for AFI members to make specific commitments to SME finance, reduce regulatory barriers, and accelerate progress on financial inclusion.
In recognition of Bank Negara Malaysia support and commitment to advance the financial inclusion agenda, AFI awarded Bank Negara Malaysia with several prestigious awards:
- The Best Host Institution in 2014, for hosting the AFI Global Policy Forum 2013 in Sasana Kijang;
- The Maya Declaration Award in 2015, in recognition of Bank Negara Malaysia achievement of financial inclusion targets and most dedicated reporting of measurable targets; and
- The AFI Leadership Award in 2015, for being the institution that provided the most leadership in the AFI Network.
2. ASEAN Working Committee on Financial Inclusion (WC-FINC)
- The ASEAN Working Committee on Financial Inclusion (WC-FINC) as endorsed by the ASEAN Finance Ministers and Central Bank Governors (AFMGM) on 4 April 2016 is mandated to coordinate and implement initiatives to advance financial inclusion in the region. WC-FINC is also a platform for sharing of country experiences, expertise and information, facilitating member countries to develop or enhance financial inclusion strategies and initiatives at both the national and regional level.
- WC-FINC also works closely with international partners, namely AFI, World Bank, United Nations Capital Development Fund (UNCDF) and Organisation of Economic Cooperation and Development (OECD) in providing technical and advisory assistance to enhance the financial infrastructure and ecosystem in ASEAN.
WC-FINC aspires to advance financial inclusion in the region by focusing on four desired outcomes, namely:
- Supporting national financial inclusion strategy and implementation plan;
- Elevating capacity building of ASEAN member states to enhance financial inclusion ecosystem;
- Promoting innovative financial inclusion via digital platforms; and
- Increasing awareness on financial education and consumer protection.
- Malaysia is a member of WC-FINC and currently holds the WC-FINC co-chairmanship with Indonesia for a 2-year term (2016-2018).
3. Other collaboration
- Bank Negara Malaysia has partnered with the Irving Fisher Committee on Central Bank Statistics, AFI, OECD and World Bank to organise various capacity building programmes for policymakers globally on financial inclusion. Bank Negara Malaysia has collaborated with Asian Banking School in developing leadership and technical training to micro finance practitioners in the region.
1. Key Indicators for Financial Inclusion in Malaysia
- Measurement Framework
Malaysia recorded higher Financial Inclusion Index
For more information on the progress of Malaysia’s financial inclusion initiatives, click here.
2. Global Benchmarks
AFI Core Set of Financial Inclusion Indicators
- Click here to view AFI Core Set of Financial Inclusion Indicators for Malaysia
- IMF Financial Access Survey
- Maya Declaration Progress Report
- World Bank Global Financial Inclusion Index (Findex)
- OECD Scoreboard on Financing SMEs and Entrepreneurs