Myanmar’s military junta is coercing banks to reopen, by threatening to force them to transfer deposit accounts to military-controlled banks if the private banks remain closed.
The order to reopen bank branches suggests a growing sense of alarm in the junta, known as the State Administration Council (SAC), at the country’s economic slide, fuelled partly by paralysis in the financial system.
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If the military commanders make good on the threat, it will speed up the reversal of the liberalisation begun under former President Thein Sein a decade ago.
In a separate order issued through the Central Bank of Myanmar on March 12 the junta has ordered commercial banks to divulge details of accounts and money transfers dating back to 2016.
The decree is specifically targeting domestic and international nongovernmental organisations operating in Myanmar.
Building a case against Aung San Suu Kyi
The orders, which were confirmed by senior executives at three of Myanmar’s commercial banks, highlight the growing push by the junta to build a case against the government of imprisoned State Counsellor Aung San Suu Kyi.
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By GlobalDataThe move is also intended to bolster the military government’s narrative of foreign interference in Myanmar’s internal affairs.
A related order also issued last week targets four specific NGOs, including Oxfam, Open Society Myanmar and the International Foundation for Electoral Systems.
It requires all banks holding accounts for any of the four to undertake a financial account audit and hand over the details.
A banking sector under siege
Myanmar’s overcrowded domestic banking sector, with more than 30 banks, including about 13 government or semi government banks, has been reeling from the impact of the Feb. 1 coup as employees joined the swelling civil disobedience movement.
Staffing levels, estimated by several senior bankers at 20% to 30% of normal, prompted most to close branches, although many have tried to keep ATMs operating.
A leaked memo dated March 9 reveals that the junta instructed the central bank to order commercial banks to resume full operations, or else transfer deposit accounts to state-run Myanma Economic Bank (MEB) and military-owned banks Inwa Bank and Myawaddy Bank.
The prospect of what would amount to semi-nationalisation of part of Myanmar’s banking system, on top of the ongoing financial system paralysis, risks shattering public trust in the banking sector.
This could trigger a run on the banks, bank executives warned.
