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Financial Sector Development

Financial Inclusion

Financial inclusion is an important thrust in the Bank's developmental role to ensure that every economic activity, geographical region and segment of society have access to financial services. Financial inclusion would include the general public having access to financing, financial services, financial redress and financial information.

Access to Financing

Initiatives are continuously undertaken to ensure that individuals and viable businesses have adequate access to financing. In particular, Bank Negara Malaysia has established a comprehensive mechanism to ensure small and medium enterprises have continued access to financing. These include establishing institutional arrangements, strengthening financial services providers, developing a microfinance institutional framework, establishing special funds and financing schemes, and improving outreach and awareness.

Initiatives have also been undertaken to ensure continued access to financing via the capital market which serves as an alternative source of financing for corporates. This includes the establishment of Danajamin Nasional Berhad to provide credit enhancements to corporates to enhance their ability to tap the bond market. As a result of the regulatory initiatives, infrastructure building and ongoing liberalisation of foreign exchange policies, Malaysia's capital market has developed greater breath and depth and hence assumed a significant role in meeting medium and long term financing needs for both public and private sectors. To date, Malaysia's bond market is the third largest in Asia after Japan and Korea.


Access to Financial Services

The Bank promotes extensive outreach programmes through wider dispersion of banks' branch networks to improve the public's accessibility to financial services. Based on the study conducted by the World Bank, it is estimated that about 80% 1 of the Malaysian population has access to a deposit account. Apart from brick and mortar branches, commercial banks proactively leverage on alternative delivery channels such as mobile phone banking and mobile units to increase outreach efficiency while keeping transaction costs low.

Improving access to financial services also ensures that the public has access to affordable financial products and services. Banking institutions are also required to offer basic savings account and basic current account at minimal cost to all Malaysians and permanent residents. Requirements are also in place for banking institutions to disclose and make available information on fees, charges and commissions imposed on products and services.


Access to Financial Redress and Access to Financial Information

To safeguard consumer interest whilst enhancing their financial capability, the Bank has put in place various avenues for consumers to seek financial redress and deal with consumer-related issues.

To assist consumers in making informed decisions suitable to their needs and capacity, various efforts were introduced, aimed at improving consumer literacy levels through a comprehensive Consumer Education Programme. The objective is to provide consumers with access to relevant information on financial products and services and provide customers with sufficient knowledge to understand the risks and obligations involved.

For further initiatives on access to financial redress and financial information, please refer to the Consumer information section

1The estimate is based on a methodology published in Honohan, P., 2008, Cross-country Variation in Household Access to Financial Services, Journal of Banking & Finance and utilized in the World Bank publication - Finance for all: Policies and Pitfals in Expanding Access (2008).