Military Bank Of Myanmar Stops Operations, Central Bank Restricts Account Withdrawals And ATM Transactions

Queues at a bank belonging to the Myanmar military. (Twitter / @ IrrawaddyNews)

JAKARTA - The Central Bank of Myanmar (CBM) imposed restrictions on cash withdrawals from automated teller machines (ATMs) and account withdrawals after a bank belonging to the Myanmar military stopped operating last week.

CBM said that starting March 1, individuals can only withdraw cash of a maximum of 500 thousand kyats or around the US $ 354 from ATMs per week. Previously, until February the maximum withdrawal was 1 million kyats per day.

"Individuals can withdraw a maximum of 2 million kyats per week from their bank accounts. For companies and organizations, the limit is 20 million kyats per week", said a CBM statement as reported by The Irrawaddy.

This step was taken after Myanmar's military bank stopped operating last week, as a result of a massive flight of deposits by customers.

Private bank services have been limited to ATMs and online banking since early February, as their employees have stopped working to join the Civil Disobedience Movement (CDM) against the military coup.

Despite pressure on the bank from the Myanmar military regime for the bank to resume operations, the employees steadfastly refused to return to their offices.

Since the coup, Myanmar's unstable political conditions have led to swirling rumors, including that several banks are on the verge of bankruptcy. Since February 8, people have lined up in front of ATMs every day to withdraw as much cash as possible.

Private banks fill all ATMs in Yangon, Myanmar's commercial capital, every morning. But cash usually runs out around 10 or 11 a.m. Last week, private banks limited withdrawals to 1 million kyats per day.

"Banks may be worried that they will face a bank rush as soon as it reopens", a founder of the Naypyitaw-based IT company told The Irrawaddy.

"The number of company withdrawals per week is quite problematic. Big companies can cause a crisis”, he said.

Currently, private banks refuse to provide payroll services, and many companies across Myanmar are now delaying payment of salaries to employees. Some companies plan to pay staff in cash.

On Monday, the central bank asked private banks to reopen branches in border cities including Muse and Myawaddy, as they play a major role in border trade.

It said traders faced difficulties due to suspension of bank services. Officials from private banks say their ability to reopen will depend on whether staff involved in the CDM return.