Malaysia unveils bank funding rules amid squeeze on liquidity

Kuala Lumpur

MALAYSIA's central bank has unveiled new rules governing the way local banks should account for certain deposits and other items on their balance sheets, in a move that may ease the recent squeeze in the ringgit money market.

Deposits which are subject to an early-withdrawal penalty of at least 50 per cent of accrued interest can be treated as "qualifying term funding", or money that can be lent out, with effect from June 1, according to a central bank circular dated Jan 30 and obtained by Bloomberg News.