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Large exposure limits in Malaysia: A new generation of capital reforms
Malaysia’s exposure draft on large exposures limits (LEL), issued on 13 December 2024 by Bank Negara Malaysia (BNM), aims to strengthen the prudential framework for banks and financial institutions in the country.
BNM’s draft aligns with the Basel’s Large Exposure Framework standards but introduces stricter aggregation rules for connected parties and tighter collateral recognition to address Malaysia’s high corporate concentration risks.
Malaysia’s updated LEL requirements will come into effect as early as 1 June 2026 subject to the finalized policy document.
It will impact:
- Banks and Islamic banks
- Investment banks
- Financial holding companies
- Bank Kerjasama Rakyat Malaysia Berhad
The LEL requirements are the foundation of responsible banking. This is an opportunity to enhance resilience, sharpen risk management, and demonstrate leadership in an evolving regulatory environment.