Banks must operate for profit and adhere to the Liquidity Principle, just like pawn shops and animators from the 18th century. To put it another way, to get it to the bank lender quickly;
These borrowers transfer funds between their hands. The lending chain’s size matters. It will get quicker and quicker. The Liquidity Principle is the name given to the entire procedure of refinancing each loan. Thusly, banks will acknowledge more stores. On the other hand, you are breaking the Liquidity Principle if you do not increase your credit.
Capital and deposits should be increased. Normalization is also required for expanding lending. Loans are made to people who live close to the bank, and there are various incentives for citizens to increase their deposits. It is likewise unscrupulous to loan to the financial local area alone. It is unknown whether the banks in Myanmar follow this code of conduct.
Let’s examine the ethical and procedural aspects once more. Accepting deposits and withdrawing cash are examples of practices that Myanmar’s commercial banks have adopted from the 18th century. distributing cash; Change of cash; a transfer to a bank account; purchasing bonds issued by the government; Money transfer At this time, it has not developed any straightforward procedures like short-term loans. The withdrawal fee must be paid each time money is withdrawn from your account. A deposit fee must be paid when making a deposit.
The transfer fee must be paid whenever money is transferred. The banking system in Myanmar is made up of banks that make money from very basic jobs. You can purchase a sturdy home by borrowing money. Land Living off of mortgages that pay interest and are secured by solid assets like buildings is not a job for a bank. Everyone knows that you can’t borrow money without a mortgage. What’s around the corner? Borrowing money in the same direction as the banking community is also unethical.
Liquidity is prioritized over profit at banks. I borrowed on non-performing loans once upon a time when the housing market was booming due to the overcrowding of loans close to the banking community. The kyat crisis has not yet left its mark on Myanmar’s financial sector. The bank doesn’t just have this issue. Instability in policy; Miscarriages centered on cash are a major factor in the deterioration of trusting relationships, such as weak economic institutions.
The deposit can be withdrawn at any time out of respect for liquidity rather than profitability. generating loan products to maintain market stability; This is done to help the economy grow. Consumption, investment, and ease of money management The procedure drives the collection procedure.
Banks need to make money. To make liquidity; The cash-to-cash ratio of deposits is frequently restricted by policy instruments selected by the central bank. In the UK, just 6% of stores are kept in the national bank.
Although the former Central Bank of Myanmar set aside 16% for current accounts and 6% for deferred deposits, banks now have a fixed deposit ratio. low percentage; The increase is connected to the creation of credit; It also drives the creation of deposits and liquidity.
Using the premise that every loan is a deposit, let’s examine how credit creative influences growth. U Ba kept 20% of the money that he deposited at A Bank for 1,000 lakhs. Let’s see how the balance changes.
A Bank holds 1,000 million U Ba. U Mya borrowed the remaining 800 kyats from the bank, but he still owed the central bank 200 kyats in cash. U Mya returned it to B Bank. 160 have been placed at the central bank by the bank.
