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The document outlines the history of banking and banking legislation in Malaysia. It discusses the establishment of major banks from 1875 to 1936 and the disruption during World War II. It then summarizes the key banking acts and legislation established since 1958 to regulate the banking sector, including the Central Bank Ordinance 1958, Banking Ordinance 1958, Banking Act 1973, BAFIA 1989, and the current FSA 2013. The FSA consolidated several laws and aligned the regulatory framework with international standards.
The document outlines the history of banking and banking legislation in Malaysia. It discusses the establishment of major banks from 1875 to 1936 and the disruption during World War II. It then summarizes the key banking acts and legislation established since 1958 to regulate the banking sector, including the Central Bank Ordinance 1958, Banking Ordinance 1958, Banking Act 1973, BAFIA 1989, and the current FSA 2013. The FSA consolidated several laws and aligned the regulatory framework with international standards.
The document outlines the history of banking and banking legislation in Malaysia. It discusses the establishment of major banks from 1875 to 1936 and the disruption during World War II. It then summarizes the key banking acts and legislation established since 1958 to regulate the banking sector, including the Central Bank Ordinance 1958, Banking Ordinance 1958, Banking Act 1973, BAFIA 1989, and the current FSA 2013. The FSA consolidated several laws and aligned the regulatory framework with international standards.
1884 – HongKong & Shanghai Bank 1888 – Algemene Bank Nederland 1920 – Bank of Malaya (Ipoh) - Batu Pahat Bank – Pacific Bank 1913 – KwongYik Bank (Selangor) 1934 – Kwong Lee Bank (Sarawak) 1935 – Ban Hin Lee Bank (Penang) 1936 – Oriental Bank of Malaya (KL)
B. World War II – disruption of banking system
c. 1945 – reconstruction & rehabilitation of pre-war banks and new
banks HISTORY OF BANKING LEGISLATION A. Central Bank Ordinance 1958 - Govern Bank Negara Malaysia(BNM) - Watson-Caine Report 1956 – main principals (a) Issuance of currency and saving to control the value of currency. (b) Act as a bank and financial advisor to govt. (c) Make sure the financial stability and financial structure in good condition. (d) To influence credit situation so to give good effect to Malaysia. - Central Bank of Malaysia Act 1958 repealed. Central Bank of Malaysia Act 2009 - Consists 100 sections divide into 15 parts. s5. (1) The principal objects is to promote monetary stability and financial stability conducive to the sustainable growth of the Malaysian economy. The primary functions of the Bank are as follows: - (a) to formulate and conduct monetary policy in Malaysia; Central Bank of Malaysia 15 - (b) to issue currency in Malaysia; - (c) to regulate and supervise financial institutions which are subject to the laws enforced by BNM - (d) to provide oversight over money and foreign exchange markets; - (e) to exercise oversight over payment systems; - (f) to promote a sound, progressive and inclusive financial system; - (g) to hold and manage the foreign reserves of Malaysia; - (h) to promote an exchange rate regime consistent with the fundamentals of the economy; and - (i) to act as financial adviser, banker and financial agent of the Government. - Part VII – Islamic financial business Establishment and functions of Shariah Advisory Council B. Banking Ordinance 1958 - To govern banks in Malaysia - Banks belong to foreign countries or under control of foreign countries cannot operate in federation of Malaya. - No provision regarding banking secrecy - Abolished 1973 Banking Act 1973 - Provision on banking secrecy. - Foreign owned bank cannot operate in Malaysia - Abolished 1989 Banking & Financial Institutions Act 1989 (BAFIA) - Govern banks and financial institutions. - Licence institution – finance company, merchant banking, discount house (public co.),money broking businesses and businesses in 3rd Schedule ( building credit businesses, credit token businesses, develpmt finance buss., factoring and leasing business) - Additional power to BNM eg. Part XI (s82-90) – investigate, search and seizure - Lots of new definations and some has been extended to cover larger scope eg. ‘Banking business’. - Part Xiii (s96-102)- banking secrecy and exceptions that allow bank to make disclosure are discussed thoroughly. - Take into consideration the system and also the people who manage the institution eg. S55 – bank’s consent required to be director of licensed institutions. - BAFIA was abolished, replace with FSA 2013. Financial Services Act 2013 (FSA) come into force on 30 June 2013 provide Bank Negara Malaysia with the necessary regulatory and supervisory oversight powers to fulfill its broad mandate within a more complex and interconnected environment, given the regional and international nature of financial developments. The FSA amalgamate several separate laws to govern the financial sector under a single legislative framework for the conventional sectors respectively (the Banking and Financial Institutions Act 1989 (BAFIA), Insurance Act 1996 (IA), Payment Systems Act 2003 and Exchange Control Act 1953 which are repealed on the same date. FSA enables continuing receptions and application of international stndrds (the global capital requiremts , supervisory stndrds, paymt stndrds, anti money laundering and counter terrorist financing stndrd, accounting stndrds and Basel III on liquidity mgmt stndrds ) Part V – Prudential Requiremts (s46-s52) Division I – Standards of prudential (s47-s52) Division II – Corporate Gorvenance (s53 –s62) Division III – Transparency requirements. (s63- 66) Division IV – Auditors Part VIII – Business Conduct & Consumer Protection Part XIII , Div 3 – Winding Up BNM have power to regulate financial intermediaries (leasing, factoring, building credit buss eg. AEON Credit,M’sian Building society Bhd etc. ) which were previously not supervised and no guideline on how they were regulated; previously need BNM acknowledgemt to operate. BNM regulate and supervise FHC (Financial Holding Co.) (eg. CIMB Group Holding Bhd., RHB Capital Bhd., Affin Holding BHd., Alliance Finance Group Bhd. etc) C. Bills of Exchange Ordinance 1949 - Passed after Federation of Malaya (1948) for standardization to the whole federation. - 1959 – Penang & Malacca – Ord. is known as Act. - 1965- Act is applicable to whole Malaysia - 1978- revised – Bills of Exchange Act (a. 204) D. Civil Law Act 1948 (a) Before 1948 (i)Penang & Mallaca – 2nd. Charter of Justice1826 – English Law (ii) Federated Malay States - Federated Malay States Civil Enactment 1937 - English law (iii) Unfederated Malay States - Customary law (b) After 1948 – Civil Law Ordinance 1956 – 7/4/56 – s5(1) & s3(1) – Law of the land is applicable but if there is lacuna, English law will be applicable with consideration to situation and custom. Other Acts
Anti Money Laundering And Anti Terrorism
Financing Act 2001 (AMLA) Development Financial Institution Act 2002 Exchange Control Act 1953 Money Services Business Act 2011 Electronic Commerce Act 2006 Islamic Financial Services Act 2013 Unclaimed Money Act 1965 (amendment 2002) Agent banking Payment systems in Malaysia Banking mediation Banking arbitration