Image credit: Borneo Post Online
Bank Negara Malaysia (BNM) has released a discussion paper on its proposed Financial Inclusion Framework 2023-2026.
The Framework sets out a clear vision to advance financial inclusion to elevate the financial well-being and standard of living of all residents of Malaysia, by:
- enabling everyone to benefit from an accessible and inclusive financial ecosystem;
- equipping individuals and businesses with affordable and suitable financial solutions; and
- empowering consumers with the financial capability to make sound financial decisions and meaningfully participate in the financial system.
The Framework features:
- a more expansive and holistic approach to transition the focus from accessibility and usage to achieving broader development outcomes as well as financial resilience and well-being;
- seven policy objectives to address remaining gaps and accelerate the advancement of financial inclusion, which are:
1: Expanding access to financial services to the “last frontier”
2: Promote secure and inclusive digital financial services
3: Enhance SME financial ecosystem
4: Improve access to and usage of risk protection
5: Strengthen financial institutions’ role and capabilities in promoting financial inclusion
6: Improve targeted support for the vulnerable segments
7: Equip consumers with improved financial capabilities
iii. four strategic enablers to support the effective implementation of the Framework, which are:
1. Strategic collaborations
2. Open data sharing
3. Effective financial infrastructure
4. Conducive regulatory environment
iv. principle-based guidance to identify the unserved and underserved – covering broader challenges of exclusion beyond geography, and includes various aspects of financial vulnerabilities; and
v. Two cross-cutting themes as underlying implementation principles: embedding gender equality considerations for greater socio-economic outcomes, and strengthening impact measurement and evaluation of financial inclusion efforts across the industry to promote greater accountability.
BNM says that the implementation of the Financial Inclusion Framework 2011-2020 has led to significant improvements in the accessibility and take-up of basic financial services in Malaysia. Despite the progress made, several barriers and challenges need to be addressed to run the last mile in progressing financial inclusion.
The Framework will also take into consideration the alignment of strategies towards new emerging growth angles in financial services, and achievement of the United Nation’s Sustainable Development Goals (SDGs) and Environmental, Sustainability and Governance (ESG) propositions for higher value creation. The proposed Framework is developed to align with BNM’s Financial Sector Blueprint 2022-2026.
Insurance
Referring to insurance services, BNM says that the COVID-19 pandemic underscores the importance of financial resilience and the need for risk protection solutions in times of uncertainty. Insurance/takaful cushions businesses and individuals against a variety of unforeseen risks, helps to build retirement savings and contributes to advancing an inclusive, resilient society.
Despite these benefits, the take-up of insurance/takaful products in Malaysia remains relatively low, particularly among the lower-income and youth segments. This is due to income constraints, lack of suitable choices and low awareness of its importance and usage. In this regard, efforts must be channelled to develop a protection landscape that is efficient, competitive and inclusive in meeting the needs of the unserved and underserved segments.
BNM said, “The priority in the coming years will be to further promote the growth of a diverse microinsurance/microtakaful market that delivers products that are accessible, affordable, needs-based as well as easy to use by:
- Encouraging broader offerings under the Perlindungan Tenang framework with more targeted and proportionate regulations. Perlindungan Tenang is a national initiative to provide simple and affordable insurance and takaful plans with a convenient claims process.
- Ensuring more seamless data-sharing across the industry.
The Financial Education Network will be intensifying financial literacy initiatives to further improve consumer awareness and understanding of risk protection and the benefits of Perlindungan Tenang among key segments that most need it.
Source: https://www.asiainsurancereview.com/News/View-NewsLetter-Article/id/83658/Type/eDaily/Malaysia-Central-bank-releases-draft-Financial-Inclusion-Framework-2023-2026