Bank Negara Malaysia has announced that greater flexibility would be accorded to the newly licensed locally-incorporated foreign banks and existing locally-incorporated foreign banks that have yet to reach a sizeable scale of operation from complying with the distribution ratio requirement for the establishment of branches. Currently, locally-incorporated foreign banks can open up to eight additional branches, subject to a specified distribution ratio of 1 (market centre): 2 (semi-urban): 1 (non-urban). 

With this flexibility, locally-incorporated foreign banks that have yet to establish the new branches or currently have less than eight branches would not be required to comply with the distribution ratio for the setting-up of their branches. This would facilitate the newly licensed locally-incorporated foreign banks to better serve their targeted customer segments and niche areas. This flexibility would also enable the existing locally-incorporated foreign banks to achieve a meaningful scale of operations to contribute more effectively to the overall development of the financial sector in Malaysia.