Members of the Association of Southeast Asian Nations (ASEAN), a political and economic organisation of ten Southeast Asian countries, have signed a banking integration framework agreement to allow the banks to enter into joint bilateral agreements.

The ASEAN Banking Integration Framework (ABIF), aimed at accelerating integration of the region’s banking sector and boosting cross-border trade and investment, will allow the countries’ banks to sign deals to operate in the partner-country on the terms that are same as those of domestic financial institutions.

Under the agreement, any two ASEAN countries will be able to enter into reciprocal bilateral agreements to allow qualified banks from their countries to operate in one another’s markets.

A bank will have to meet criteria mutually agreed by their respective central banks to receive "Qualified ASEAN Bank" (QAB) status.

The move will pave the way for greater access to loan facilities across the 10 ASEAN member countries and will facilitate stable flow of funds in the region.

Malaysia’s central bank Bank Negara Malaysia (BNM) Governor Zeti Akhtar Aziz said: "This is a major step forward. For post-2015, we have plans for the major areas that we are going to elaborate on to advance this integration.

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"If we don’t have this, we will be investing our surplus funds in developed financial markets and then it comes back to us in the form of volatile capital flows."