What is Domestic Ringgit Borrowing (DRB)?

Domestic Ringgit Borrowing (DRB) refers to borrowing or financing in Malaysian Ringgit (MYR) by residents from other residents in Malaysia. More than a financial term, DRB plays a crucial role in how Malaysia manages its capital flows, safeguards monetary stability, and controls foreign exchange activities.

It is a fundamental part of the regulatory framework overseen by Bank Negara Malaysia (BNM), with wide-reaching implications for individual investors, corporations, and financial institutions.

Domestic ringgit borrowing meaning in malaysia

In simple terms, DRB involves any form of credit or financing arrangement in MYR between two Malaysian residents. This includes:

• Personal loans
• Housing and hire purchase loans
• Corporate credit lines
• Redeemable preference shares
• Private debt securities
• Islamic financing equivalents

BNM defines a “resident” as a Malaysian citizen, permanent resident, or entity operating in Malaysia. Importantly, the DRB designation affects a resident’s ability to convert Ringgit into foreign currencies for offshore investment. 

This means DRB isn’t just a technical classification—it affects how much money Malaysians can legally send abroad for investing in overseas properties, foreign stocks, or other assets.

Regulatory context: BNM's role and policy rationale

Malaysia has maintained capital flow management rules since the Asian Financial Crisis in 1997–98. While the country has liberalized many aspects of its foreign exchange policy, DRB continues to serve as a safeguard against capital flight and speculative financial activity that could destabilize the economy.

The main policy goal? Encourage Ringgit borrowings to fund domestic economic activity—such as infrastructure, housing, and business growth—instead of fuelling foreign investments.

Who regulates DRB?

BNM governs DRB through its Foreign Exchange Policy Notices (FEP Notices). These notices, updated periodically, define what counts as DRB and what does not. They also outline how DRB status affects a resident’s foreign currency investment limits.

The legal backbone for this is the Financial Services Act 2013 and the Islamic Financial Services Act 2013, which grant BNM power to issue binding rules and enforce compliance.

What counts as DRB and what doesn’t?

Inclusions under DRB

BNM defines DRB broadly. These are commonly considered as DRB:

• Credit facilities or financing from a resident to another resident
• Hire purchase, personal loans, mortgages (except for one house and one car)
• Redeemable preference shares (conventional and Islamic)
• Private debt securities
• Intercompany loans, where the borrowing is used for investment purposes

If a company has DRB, all its related companies (parent or subsidiaries) are also considered to have DRB.

Exclusions from DRB

Certain types of borrowing are excluded from the DRB definition. These include:

• One home loan and one car loan by an individual
• Credit card and charge card balances
• Trade credit terms for the purchase of goods or services
• Borrowing within a corporate group for operational expenses
• Factoring facilities without recourse
• Financial guarantees and performance guarantees
• Sundry business expenses or employee-related costs (e.g. travel, insurance)

These exclusions aim to reduce unnecessary restrictions on routine financial activity while still preventing risky capital outflows.

Why is DRB status important?

DRB affects your foreign investment limit

The most direct impact of DRB is on your ability to convert Ringgit to foreign currency for investment. Here’s how it breaks down:

So, if you have DRB—say, a second housing loan or a business loan—you’re limited to converting and investing up to RM1 million a year. 

Without DRB, you can invest as much as you want, provided the funds aren’t from foreign currency borrowings exceeding RM10 million.

Fund transfer restrictions

The same RM1 million limit applies if you want to transfer funds abroad for investment purposes—whether through wire transfers or digital remittance platforms.

However, education, migration, or employment-related transfers are exempt, though documentation may be required.

How DRB works in real life

Individuals

Let’s say a Malaysian investor owns one house and one car, both under financing. They are not considered to have DRB. 

But if the same person takes a second mortgage for a new property, that second housing loan pushes them into DRB status, capping their foreign investment flexibility at RM1 million per year.

If they repay all their borrowings, they can be considered “without DRB” starting the following month, allowing full foreign investment access.

Businesses

For companies, DRB status is more complex. A subsidiary borrowing from a related entity may or may not fall under DRB, depending on usage. 

If the funds are for operational costs like staff expenses, it’s excluded. But if they’re used for investment, the borrowing counts as DRB.

Corporations also have to consider group-level DRB status, meaning if one part of the group has DRB, it may affect the entire group’s ability to transfer funds offshore or invest.

DRB’s impact on Malaysia’s economic strategy

Financial stability and capital controls

By limiting how much residents with DRB can send abroad, BNM aims to keep domestic liquidity stable and ensure that credit fuels local economic activity. 

This helps support Malaysia’s GDP growth, especially in key sectors like real estate, infrastructure, and SMEs.

Balancing liberalization and risk

Malaysia isn’t fully closing its capital account. The DRB framework strikes a balance: liberal for residents with no DRB, more controlled for those with DRB. 

It’s a way to offer flexibility without letting capital fly out unchecked, which could put downward pressure on the Ringgit or spark inflation.

Macroprudential lens

This aligns with global best practices. Other countries like India and China also use similar frameworks to manage foreign investments, ensuring that domestic funds are channeled into productive, local economic uses.

Compliance and enforcement

Who needs to declare as DRB?

• Individuals: Must self-declare when investing in foreign currency assets.
• Corporations: Need to monitor and declare DRB at both entity and group level.
• Banks: Must verify DRB status of clients and ensure transactions comply with FEP rules.

BNM requires that all parties accurately report DRB status to avoid enforcement actions such as fines or transaction rejections.

DRB declaration example

If you’re applying to convert MYR into USD for investing in US stocks via a broker like Moomoo, your bank or brokerage will ask you to declare your DRB status.

Failing to do so—or incorrectly declaring—may lead to your transaction being blocked or flagged by regulators.

Real examples and case studies

Case 1: investor with multiple loans

A 40-year-old professional owns a home and has two hire purchase loans for cars. They’re considered to have DRB. 

If they want to invest RM2 million in a Singapore REIT, they’ll be limited to RM1 million per year unless they clear their borrowings.

Case 2: business with operational financing

A logistics company in Selangor borrows RM500,000 from its holding company to pay for fleet maintenance and insurance. 

This does not count as DRB. However, if the money is used to purchase foreign assets, it becomes DRB.

Case 3: fintech user transferring abroad

A Malaysian freelancer using Touch ‘n Go or Wise to transfer funds to their overseas investment account must declare DRB status. 

With DRB, the annual cap applies even if the platform does not explicitly state it.

DRB and the future of financial regulation

Is DRB here to stay?

Yes — but it will evolve. BNM has adjusted FEP Notices several times in the last five years to reflect market conditions, global capital trends, and digital innovations like fintech and crypto.

With growing investor interest in foreign stocks and alternative assets, future revisions may further clarify digital asset investments or multi-currency accounts.

What should Malaysians do?

• Assess your DRB status regularly
• Repay or consolidate loans if you want greater investment flexibility
• Consult with your bank or financial planner before making large offshore transfers

Frequently asked questions

What is domestic ringgit borrowing (DRB)?

It refers to borrowing or financing in MYR by a resident from another resident, subject to BNM's FEP rules.

Does one home loan or car loan count as DRB?

No. You’re allowed one residential property loan and one vehicle loan without being classified as having DRB.

How does DRB affect my overseas investments?

If you have DRB, you’re limited to RM1 million per year for investing in foreign currency assets or transferring funds abroad.

How can I know if I have DRB?

Check your personal or business loans in MYR. More than one mortgage, multiple car loans, or corporate financing may indicate DRB status.

How do I update my DRB status?

After clearing your borrowings, your status will update the following month. You may need to declare this when applying to invest or transfer funds.