PB 303 Banking in Malaysia

- Course Outline -

Objective

BANKING IN MALAYSIA exposes students to the characteristics and structures of

the financial system in Malaysia. This course also emphasizes the roles and functions
of Bank Negara Malaysia, banking institutions and other financial intermediaries in
the national financial system. It also provides an explanation of the characteristics
and functions of the services provided by each institution. This information will
increase the knowledge and understanding of the students regarding the field of bank
management as well as provide an understanding of the relationship between
financial institutions and the roles played by the financial system of Malaysia as a
whole.
Name/Office/Ext/E-mail
1) Pn Hanita Adnan (Coordinator)
Bilik Pensyarah B
Ext:
5101
hanita@psa.edu.my

Lecturer

2) Pn Zanita Ismail
Bilik Pensyarah A
Ext:
5101
zanita@psa.edu.my

Upon completion of this course, students should be able to:1. Recognize correctly the roles and structures of the financial system in
Malaysia
2. Communicate ideas analytically the roles of Bank Negara Malaysia,
commercial banks, finance companies, investment banks and non-bank
financial intermediaries in Malaysia.
3. Present confidently the concept of Islamic banking which is used in banking
products via group.
4. Identify appropriately characteristics and functions of the services provided
by each institution including consumer-activated electronic banking systems
via group.

Overall Course
Learning
Outcomes

Format

Programme (s)
Course Material
Assessment

The course comprises of 15 weeks lectures : 4 hours per week

Third semester Diploma in Business Studies

You will be able to access lecture notes each week via http://cidos.edu.com.my
i.

PB303/JPG/PSA

Continuous Assessment (CA)

1

Continuous evaluation is carried out throughout the semester and consists of the
following parts: (refer Attachment 1)
a.
b.
c.

Quiz
- minimum of 3
Test
- minimum of 2
Other Assessment Task :
i.
Presentation
- minimum of 2
ii.
Article Review
- minimum of 2

20%
30%
30%
20%

ii.
Final Examination (FE)
A final examination is held at the end of the semester
The percentage ratio of FE to CA should follow the guidelines stated in the ArahanArahan Peperiksaan dan Kaedah Penilaian which is approved by the Lembaga
Peperiksaan dan Penganugerahan Sijil/Diploma Politeknik

Workload

3 Credit

Reference Books
Main: Ruziah A. Latif, Financial Institutions in Malaysia:An Introduction (2011). Universiti Teknologi
Malaysia (UITM) ,University Publication Centre.
Additional:
Adiwarman A. Karim. (3rd Edition 2005). Islamic Banking: Fiqh And Financial Analysis. Jakarta:
PT RajaGrafindo Persada.
Annual Report And Quarterly Bulletin. (Latest Edition). Kuala Lumpur: Bank Negara Malaysia.
Diploma in Banking and Financial Services: Monetary Economics and the Malaysian Financial
System (1996). Kuala Lumpur: IBBM.
Effy Oz. ( 3rd Edition 2002). Management Information Systems. Course Technology.
Jabatan Ekonomi. (1994). Wang Dan Urusan Bank Di Malaysia. Kuala Lumpur: Bank Negara
Malaysia.
Musthapa Hj. Abdullah. (1993). Bank Islam : Teori Dan Praktis. Kuala Lumpur: Publishing Ltd.
Pang J. (1991). Banking And You: Your Essential Guide To Banking In Malaysia. Selangor: Eagle
Trading Sdn. Bhd.
Perry, F.E. The Elements Of Banking. Methuen And Company In Assosiation With The Chartered
Institute Of Bankers.
P Gerrard. (1997). International Trade Finance. Kuala Lumpur: IBBM.
The Central Bank And The Financial System In Malaysia A Decade of Change. (1999). Kuala
Lumpur: Bank Negara Malaysia.
Turban, Rainer & Potter (2001). Introduction to Information Technology.John Wiley.

PB303/JPG/PSA

Agenda :
Week
2 weeks
8 hours
L : 6 hours
T : 2 hours
3 weeks
12 hours
L : 9 hours
T : 3 hours
2 weeks
8 hours
L : 6 hours
T : 2 hours
2 weeks
8 hours
L : 6 hours
T : 2 hours
2 weeks
8 hours
L : 6 hours
T : 2 hours
2 weeks
8 hours
L : 6 hours
T : 2 hours
2 weeks
8 hours
L : 6 hours
T : 2 hours

Topic
TOPIC 1: FINANCIAL STRUCTURE
Introduction to the roles and structures of the financial system in Malaysia,
laws regulating financial institutions and characteristics, roles and
objectives of the Labuan International Offshore Financial Centre (IOFC).
TOPIC 2: CENTRAL BANK
Introduction to the establishment of Bank Negara Malaysia (BNM),
objectives and the organizational structure of BNM, relationships with
international institutions and techniques to influence the supply of funds,
credit and interest rates using financial regulatory instruments and industry
reforms
TOPIC 3: COMMERCIAL BANKS
Roles and responsibilities of the commercial banks and services provided in
commercial banks which include deposits, money remittances and other
types of services.
TOPIC 4: FINANCE COMPANIES AND INVESTMENT BANKS
Introduction and roles of finance companies and investment banks, services
provided in finance companies - deposits, loans, hire purchase, leasing, unit
trusts, services provided by investment banks - activities that are based on
fees and funds.
TOPIC 5: NON-BANK FINANCIAL INTERMEDIARIES
Roles of non-bank financial intermediaries Development Finance
companies, Savings institutions, Employees Provident and Pension Fund,
and Insurance Companies, and other financial intermediaries Factoring
companies, Leasing companies, Credit Institutions, Unit Trusts, Cagamas
and Credit Assurance Companies.
TOPIC 6: ISLAMIC BANKING IN MALAYSIA
Islamic banking concept and the need for Islamic banking, Islamic financial
instruments, comparison between the Islamic banking system and the
conventional banking system and implementation of Islamic banking in
Malaysia.
TOPIC 7: ELECTRONIC BANKING
Electronic retail payments systems, technologies and issues involving ecommerce banking and consumer-activated electronic banking systems

Course learning Outcome (CLO)

1. Describe correctly the roles and structures of the financial system in Malaysia
2. Illustrate clearly characteristics and functions of the services provided by Malaysian banking
systems.
3. Arrange a group work on Malaysian banking system.

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SYLLABUS:
1.0 FINANCIAL STRUCTURE
1.1 Know the roles and structures of the financial system in Malaysia
1.1.1 Define the roles of the financial system
a. Financial Intermediation
b. Payment systems
1.1.2 Classify the structures of the financial system in Malaysia which consist the following:
a. Financial Institutions
i. Banking system
ii. Non-bank financial intermediaries
b. Financial Markets
i.
Money & Foreign Exchange markets
ii.
Capital markets
iii.
Derivatives markets
iv.
Offshore markets
1.2 Understand the laws regulating financial institutions
1.2.1 Describe laws which regulate financial institutions
a. Banking and Financial Institutions Act 1989 (BAFIA)
b. Offshore Act 1990
c. Islamic Banking Act 1983
1.3 Know the characteristics, roles and objectives1.3 Know the characteristics, roles and objectives of
Labuan International Offshore Financial Centre (IOFC)
1.3.1 List the characteristics, roles and objectives of the Labuan International Offshore Financial
Centre (IOFC)
1.4 Realize the challenges faced by the financial sector from the global Economy
1.4.1 Discuss the challenges faced by the financial sector from the global economy.
2.0 CENTRAL BANK
2.1

Know the establishment of Bank Negara Malaysia (BNM)

2.1.1 Describe the establishment of Bank Negara Malaysia (BNM)
2.2 Understand the objectives of BNM.
2.2.1 Elaborate on the objectives of BNM in the financial system
a. Issue currency and keep the reserves safeguarding the value of the currency
b. Act as a banker and financial adviser to the Government
c. Promote monetary stability and a sound and financial structure
d. Influence the credit situation to the advantage of Malaysia
2.3 Understand the organizational structure of BNM and the relationship between BNM and international
institutions
2.3.1 Describe the organizational structure of BNM
2.3.2 Explain the functions of these departments in BNM
a. Economics Department
b. Investment and Treasury Department
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c. Bank Examination Department

d. Control of Banking Department
e. Banking Supervision Department
f. Payment System Department
2.3.3 Identify the relationship between BNM and International Institutions
2.4 Realize BNM techniques to influence the supply of funds, credit and interest rates using financial
regulatory instruments and industry reforms
2.4.1 Analyze the techniques used by BNM to influence the supply of funds, credit and interest
rates using financial regulatory instruments
a. Statutory Reserve Requirements (SRR)
b. Monetary Liquidity Requirement (MLR)
c. Control of interest rates
d. Open market operations
e. Discount operations
f. Moral persuasion
g. Credit control
2.5 Understand the development of the banking industry over time (Industry Reforms)
2.5.1 Revise the development of the banking industry over time (industry reforms)
3.0 COMMERCIAL BANKS
3.1 Know the roles and responsibilities of commercial banks
3.1.1 Describe the roles and responsibilities of commercial banks
3.2 Understand the banking services provided by commercial banks
3.2.1 Explain types of deposits
a. Current account
b. Savings account
c. Fixed account deposit
3.2.2 Elaborate on types of money remittances
a. Demand draft
b. Telegraphic transfer
c. Mail transfer
d. Standing instructions.
3.2.3 Elaborate on advance and loans
a. Overdraft
b. External cheque purchase
c. Fixed and term loans
3.2.4 Identify status of the following
a. Credit cards
b. Bankers guarantee
c. Trust receipts
d. Enquiry status
e. Travellers cheques
3.2.5 Verify other services
a. Share trading
b. Insurance
c. Unit trust
d. Will writing
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4.0 FINANCE COMPANIES AND INVESTMENT BANKS

4.1 Know the history of finance companies and investment banks
4.1.1 Describe briefly the history of the following
a. Finance companies
b. Investment banks
4.2 Identify the roles of finance companies and investment banks.
4.2.1 Recognize the roles of each of the following financial institutions in the system
a. Finance companies
b. Investment banks
4.3 Understand the services provided by finance companies and investment banks
4.3.1 Define the services of finance companies
a. Deposits
b. Loans
c. Hire purchase
d. Unit trusts
e. Leasing
4.3.2 Elaborate on the services of investment banks (based on fees)
a. Corporate financial and advisory services
b. Portfolio and investment services
c. Corporate banking
d. Fund-based activities
5.0 NON-BANK FINANCIAL INTERMEDIARIES
5.1 Know the roles of non-bank financial intermediaries
5.1.1 Differentiate the roles of non-bank financial intermediaries which comprise the
following 5 main categories:
a. Development finance companies
b. Savings institutions
c. Employees provident and pension fund
d. Insurance companies
e. Financial intermediaries
i. Factoring companies
ii. Leasing companies
iii. Credit institutions
iv. Unit trusts
v. Cagamas
vi. Credit assurance companies
6.0 ISLAMIC BANKING IN MALAYSIA
6.1 Understand the Islamic banking concept
6.1.1 Interpret the Islamic banking concept
6.2 Understand the need for Islamic banking in the financial system
6.2.1 Explain the need for Islamic banking in the financial system

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6.3 Understand Islamic financial instruments

6.3.1 Describe the Islamic financial instruments that are available in Malaysia
a. Al-Wadiah
b. Mudharabah
c. Musyarakah
d. Bai Bithaman Ajil
e. Assalam
f. Murabahah
g. Ijarah
h. Wakalah
i. Kafalah
j. Ar Rahn
k. Qardul Hassan
l. Hiwalah
m. Al Dayn
6.4 Compare the Islamic banking system to the conventional banking system
6.4.1 Compare Islamic banking system to conventional banking system
6.5 Justify the implementation of Islamic banking in Malaysia
6.5.1 Explain the implementation of Islamic banking in Malaysia
7.0 ELECTRONIC BANKING
7.1 Know the basics of electronic banking
7.1.1 Define electronic banking and electronic funds transfer (EFT)
7.1.2 Describe EFT as a means of payment
7.1.3 Identify categories of electronic banking systems
7.2 Learn about non-consumer-activated electronic banking systems
7.2.1 Differentiate the following non-consumer activated electronic banking systems
a. Nature of credit and debit transfers
b. Electronic credit and debit transfers
c. International electronic funds transfer
7.3 Understand consumer-activated electronic banking systems
7.3.1 Outline the following electronic banking services
a. Cash dispensers and ATMs
b. Electronic funds transfer at point of sale (EFTPOS)
c. Credit cards
d. Home and office banking
e. Internet banking
7.4 Discuss the issues involving e-commerce banking
7.4.1 Discuss the issues involving e-commerce banking
a. Security
b. Secrecy

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Important Notes:
1. All students are expected to appear in the Quiz and Test. No credit will be given to the
absentees without valid and substantiated reason (for which proof has to be produced). There
is no make-up test/Quiz once you have taken the same.
2. Do come to class on time or 10 minutes early.
3. Switch off/ silent your phone during the class.
4. Compulsory to bring dictionary to class.
5. Do submit your assignment on time. Your marks will be deducted per day late.
ATTACHMENT 1:

PB303/JPG/PSA