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report is consists the overview of regulations financial institutions and all
supervision in Malaysia. In this report we will focuses on six things that we
think that it could be the most important things that all financial
institutions must have.  Before that, we
must make sure that, we know the meaning of the regulations. In simple word,
regulations can be defined as a rule that all financial institution must

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I mention before, we will discuss about six things in this report. First of
all, we will discus about the regulatory framework. There are three main
regulatory in this framework. Second are authorities and regulators. In this
section the discussion is about the nature of the financial institution. Third
is we will discus about the banking license. Here, we will discuss about how a
bank can get the license and the procedure to get the license.

we will discuss about the forms of banks. There are many types of banks in
Malaysia and because of that, we must know the function of the every bank. Then
we will talk about the organization of bank in Malaysia. Lastly, we will discus
about the regulatory development and tropical trends.

objectives report to know that every financial institution must have rule that
they follow. Yes, we know that, financial institutions have the power to give
the services to us however they can’t charge the interest based on they want.

BNM also want to secure the rights of the consumer. Beside that, this
regulations is also want to make sure that, the financial institutions have the
backup and to make sure the financial services can give the best services to
make sure economy stable.










1.1  Financial Sector Blueprint 2011-2020

Financial Sector Blueprint was launched in December 2011 against a
backdrop of uneven global growth in the aftermath of the 2008/09 global
financial crisis. BANK Negara Malaysia is starting a review of its Financial
Sector Blueprint (2011-2020) as this year is the midway point of the 10 year
plan. Sources say the central bank has put together several multi-party working
groups to discuss the various aspects of the existing blueprint. It is learnt
that these working groups are tasked with reviewing the implemented or ongoing
implementation of initiatives with a view of making recommendations on what
other policy measures are required over the next five years.

The techniques and recommendations of the Blueprint will build on the
strong foundation of the Malaysian financial system. Malaysian Financial institutions
these days are well capitalized with strong buffers, advanced risk management
and corporate governance practices, and more regional presence. The financial
infrastructure in Malaysia has additionally been drastically strengthened, such
as the development of a deep and vibrant bond marketplace, strong fee and
agreement systems, and an powerful financial stability. This has been supported
by means of a complete and sturdy regulatory and supervisory framework and
powerful surveillance this is forward searching and focused on addressing the
risks to standard economic stability. In addition, Malaysia has a comprehensive
Islamic financial system that is recognized as among the most advanced in the

International Islamic Financial Centre (MIFC)

The Malaysia International Islamic Financial Centre (MIFC) initiative
was launched in 2006 to develop Malaysia as a global marketplace for Islamic
finance. Due to the fact inception more than 30 years ago, Islamic finance in
Malaysia has developed into a complicated Islamic finance marketplace that is
characterized by a means regulatory and supervisory framework, a deep primary
market and active secondary sukuk market, a diverse talent base with global
capabilities and connectivity, and product breadth and depth. The Malaysian
marketplace also offers an efficient system for multi-currency clearing and

The MIFC initiative accommodates a community network of the
country’s financial sector regulators, including Bank Negara Malaysia (Central
Bank of Malaysia), Securities Commission Malaysia, Labuan Financial Services
Authority and Bursa Malaysia (Kuala Lumpur Stock Exchange), Government
ministries and agencies together with industry participation from the banking,
takaful, re-takaful, capital market institutions, human capital development
institutions and professional ancillary services companies which are
participating and working collaboratively in Islamic finance. Malaysia
welcomes industry practitioners to conduct international business in Islamic
finance, while enjoying a highly conducive business environment. As a
destination for financial investment, Malaysia provides a marketplace for
global Shariah-compliant investment opportunities through wide range of
international financial institutions, extensive expertise and an array of
Islamic financial products and services


1,3 Labuan International Business Financial Centre

Labuan was designated as the
country’s International Business and Financial Centre (IBFC) (formerly known as
International Offshore Financial Centre) in 1990. There have been several
agencies that were involved at the early stages of Labuan’s establishment as
International Business and Financial Centre. The Malaysian government set up
Labuan Financial Services Authority (FSA) as a one-stop agency to rationalize
the regulatory framework of the business and financial centre. In 2008, an
official agency namely Labuan IBFC Incorporated was established as the
jurisdiction’s marketing arm. Labuan FSA and Labuan IBFC Incorporated work
together to achieve the objective of enhancing Labuan’s reputation as a premier
International Business and Financial Centre in the Asia region.








Bank Negara Malaysia (BNM) is authorized to
act because the regulator of
banking establishments underneath the Financial Services
Act 2013 (FSA), the Islamic Financial Services Act 2013 (IFSA)
and therefore the central Bank of Malaysia
Act 2009 (CBA). BNM has broad
powers of supervision and control over banking institutions licensed under the
FSA and the IFSA. In discharging its supervisory functions, BNM adopts a
risk-based supervision approach, under which financial institutions are
assessed and monitored based on risk profiles and adequacy of risk management

Role of Central Bank of Malaysia is entrusted to BNM under CBA. BNM
reports to the Minister and keeps the Minister informed of matters relating to
monetary and financial sector policies. Some of principal of BNM are to promote
monetary stability and financial stability conductive to the sustainable growth
of the Malaysian economy. In promoting monetary stability, BNM needs monetary
that serves the interest of the country, with the most important of objective
is maintaining the price stability giving due to development within the














Characteristic and


Activities which
require a banking licence under the Financial Services Act 2013 (FSA) are
banking and investment banking business while Islamic bank and International
Islamic Bank which are issued by under Islamic Financial Services Act (IFSA) .

Under banking business is consist of accepting deposits, paying or collecting
cheques, providing finance and others .While investment banking business
consist of accepting deposits on deposit account and providing finance. These
activity carried on pursuant to a Capital Markets Services Licence under the
Capital Markets and Services Act 2007 (CMSA).While other business prescribed by
Bank Negara Malaysia (BNM), with the approval of the Minister.  BNM and The Minister have different function
to issue guidelines which are under the FSA or IFSA. BNM has many issued
guidelines in relation to capital adequacy, financial reporting, anti-money
laundering and prudential limits and standards. Other than that, BNM also has issued guidelines for the establishment of
an international Islamic bank.


In Labuan, any
activities in Labuan banking business is defined under the Labuan Financial Services and Securities
Act 2010 (LFSSA) and Labuan Islamic Financial Services and Securities Act
(LIFSSA) which are receiving deposits, Labuan investment banking business, Labuan
financial business, Labuan Islamic banking business, While other business
specified by the Labuan FSA, with the approval of the Minister subject
compliance with the applicable exchange control restrictions under the FSA. LIFSSA empowers the Labuan FSA to grant
licences for the conduct of ‘Labuan Islamic banking business’, meaning the
carrying on of ‘Labuan banking business’ in compliance with shariah principles.











Licensing Procedures


            An applicant
for a commercial banking licence, an investment banking licence or an Islamic
banking licence must be a public company incorporated under the Companies Act
2016 (CA). IFSA aslso allows a
foreign institution to operate an international Islamic banking business
through a branch registered in Malaysia. And that application must be made in
writing to the Minister by submitting the application through BNM. If BNM is
satisfied that the applicant fulfils the set criteria and that it would not,
among others, be detrimental to the financial system of Malaysia to grant a
licence, BNM can make a recommendation to the Minister of Finance (Minister) as
to whether the licence should be granted or refused and the conditions, if any,
to be imposed on the licence. While to get the licences for Islamic banking and
International Islamic Banking are similar in application for the procedures.But
, there are certain criteria that must be satisfied before BNM can recommend
the granting of an Islamic banking licence which are ;(i)the
aims and operations of the banking business of the proposed Islamic bank do not
involve any element which is contrary to the Shariah and (ii) There must be a
provision in the articles of association of the bank for the establishment of a
Shariah committee.


            While the
application for a Labuan banking licence
must be a Labuan company, a foreign Labuan company  or a Malaysian bank .An application for a
licence to carry on Labuan banking business or Labuan investment banking
business must be made in writing to the Labuan FSA by or on behalf of the
applicant. The difference between Labuan banking business and Labuan investment
banking business for application the licence is Labuan Investment bank not
allowed to conduct business of receiving deposits on a current account , saving
account and saving account.











State-owned Bank

            In Malaysia , there are no
state-owned bank although there are government linked investment companies
which control significant stakes in larges domestic financial group.


Universal banks,
commercial and retail banks


Now a days, many large banks in Malaysia such
as commercial bank and retail bank can able to a full suite of banking and
financial services. However, there are no universal bank in Malaysia.

Commercial banks are allowed to provide Islamic banking services, subject to
the prior written approval of BNM. As some of the activities of commercial
banks could involve dealing in securities, advising on corporate finance, the
provision of investment advice and fund management ,there is a regime for
licensed commercial banks to register themselves with the SC in accordance with
the CMSA.


Investment Bank


            In 2005
,investment bank was created through rationalisation
of existing merchant banks, discount houses and stock broking companies within
domestic banking groups.The function of investment bank is to  conduct
activities based on the types of licences held prior to their rationalisation,
and are additionally allowed to undertake fund management and unit trust
businesses in line with securities laws and guidelines issued by the SC.

Investment bank also a private company
that provides various financial and services to individuals, corporations, and
governments such as raising financial capital by underwriting or acting as the
client’s agent in the issuance of securities. Example of investment in Malaysia
is Maybank Investmet Bank Berhad and Public Investment Bank Berhad.








Private Bank


            Private banking is a special service to ease the transactions of
high net worth people.

Each banks has a minimum amount that need to have in the account to be eligible
for private banking services. For example ,CIMB Private Banking .

Other Bank

            There are two other categories of
financial businesses which come within the purview of the FSA, but do not
require banking licenses. One is approved business that required registration
under BNM. The final category of businesses includes factoring, hire purchase,
and financial .These businesses require neither approval nor registration with
BNM, but are still subject to the regulatory oversight of BNM under the FSA.






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