Banking system within Malaysia


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Banking system within Malaysia

  1. 1. To Be the Premier Agency Responsible for theManagement of the Nations Finance andEconomy
  2. 2. To Manage the Nations Finance and EconomyEffectively, Transparently and Efficiently toAchieve the Nations Development Goals
  3. 3.  Ensure sustained and continuous economic growth Ensure effective and prudent financial management Pursue a more equitable sharing of national wealth Improve quality of life and well being of society
  4. 4.  To formulate and implement fiscal and monetary policies in order to ensure effective and efficient distribution and management of financial resources. To formulate financial management and accounting processes, procedures and standards to be implemented by all Government. To monitor that Minister of Finance Incorporated companies are managed effectively. To monitor the financial management of Ministries, Government Departments and statutory Bodies.
  5. 5.  The minister’s responsibilities include dealing with all the other departments in deciding the funding levels of each ministry and related bodies. The minister is also responsible for program cuts and the increases or decreases in tax.
  6. 6.  To monitor financial procedure for department/ federal agencies within the country To Manage Supplier And Consultant Registration Within Malaysia. To Administer Federal Government Housing Loan.
  7. 7. Under Section 25(1) No personshall, according, receive, take, or accept depositsexcept under and in accordance with a validlicence granted under section 6 (4)(Receiving, taking or acceptance of depositsprohibited, except under and in accordancewith a valid licence granted under section 6(4).) to carry on banking, financecompany, merchant banking or discounthouse business.
  8. 8.  On the 3rd of June 2010, Sunshine Empire Sdn Bhd was charged under section 25(1) of the banking and financial institutions Act 1989 of which the company according to pleaded guilty to accepting deposits from depositors without license under section 6(4) of the same Act.
  9. 9. According to the exchange controlAct 1953 on the issue of guarantees readsunder section 10(1) that except with thepermission of the controller, no person residentin the scheduled territories shall give anyguarantee or do any act which involves, is inassociation with, or is preparatory ExchangeControl 17 to the giving of any guarantee,indemnity or similar undertaking in respect ofany debt, obligation or liability.
  10. 10.  On the 2nd of September 2010, Walton International Property Group according to was charged under the exchange control Act 1953 section 10(1) for committing multiple offences not limited to but including acting as a controller and issuing guarantees for businesses and individuals.
  11. 11.  According to Sonia K (2009), Brunei’s banking system is ranked third (3rd) in the region and seventh (7th) in Asia and 618 in the world as reported by the Global competitiveness Report 2008-2009 as compared to Singapore which is ranked first (1st) in the region, fourth (4th) in Asia and 131 in the world or Malaysia which is ranked second (2nd) in the region, fifth (5th) in Asia and 509 in the world.
  12. 12.  Comprises of commercial banks, which play an important role in Brunei financial sector. Out of 9 banks presently licensed to conduct businesses within the country, 6 are foreign owned and represented by branch operations
  13. 13. Local Banks Foreign BankBaiduri Bank Bhd CitiBank N.A (USA)Islamic Development Bank of The Hong Kong and ShanghaiBrunei Bhd Banking Corporation LtdIslamic Bank of Brunei Bhd Malayan Banking Bhd (Malaysia) United Overseas Banking Limited RHB Bank Bhd (Malaysia) Standard Chartered Bank
  14. 14.  Accepting Deposits Provision of Loans Issuing Bank Guarantee Fund Management Issuing Letter of Credit Money Changer Management
  15. 15.  Direction of Lending for all banking operations in Brunei Darussalam – Quarterly Consolidated monthly statement of Assets and Liabilities for all banking operations in Brunei Darussalam – Monthly Appendix II. a Schedule (Reserve Requirement) – Monthly Appendix III Schedule (Statement of Assets and Liabilities) – Monthly Capital Adequacy Computation – Monthly
  16. 16. This is done through the conducting of an off-site analysis of the financial returns of banks, focusing on major areas such as: Investment Provision State of Assets Administration Quality
  17. 17. Brunei Currency Board (BCB) established on 12th June 1967 under the Brunei currency Act of 1967 to manage and issue currency notes and coins in the country.
  18. 18. Brunei Currency Board (BCB) made ainterchangeability currency agreementbetween Singapore and Brunei whichallows both countries to interchange theircurrencies at par without either countryrunning the risk of currency exchange ratefluctuations and thus further facilitatestrade and commerce between the twocountries.
  19. 19. The individual currencies are acceptableas customary tender when circulating inthe country in which they are not legaltender.
  20. 20.  To maintain strict control over the amount of currency in circulation whereby the external and liquid assets must exceed the statutory limits of 70% and 30% respectively; To ensure that the demand for currency notes and coins is adequately and sufficiently met by coordinating its activities with the banks;
  21. 21. To assist other departments within the Ministry of Finance in implementing the nation’s monetary policy; To ensure the highest degree of protection for the Board’s assets and custody items held by it; To ensure prudent management of the Currency Fund and the Currency Reserve Fund.
  22. 22.  NGO’s still do not have the support of banks in the country and their biggest issues are with the attitudes and perceptions banks have towards small businesses and microenterprises which are as follows:
  23. 23.  Bankers perceive small businesses and microenterprises as bad credit risks. Many insolvent state-owned agricultural banks seemed to prove that small farmer clients could not or would not repay their loans. The perception is that small clients do not have stable, viable businesses to generate repayment.
  24. 24.  Bankers also believe that because microloans are small and have short terms, bank operations will be inefficient and costly. It takes the same amount of time and effort (if not more) to make a RM1,000 loan as a RM100,000 loan, but the return on the larger loan is much greater. So why make a small loan?
  25. 25.  Enterprise clients have difficulty approaching a bank because they lack education and do not possess business records to demonstrate cash flow. In many developing countries, social, cultural, and language barriers do not allow for an easy relationship with a modern banking institution.
  26. 26.  following are key areas that the NGO’s believe need to be addressed on order to ensure successful micro financing in Malaysia:
  27. 27.  The commitment of commercial banks (particularly the larger banks) to microenterprise lending is often fragile, and generally dependent on one or two visionary board members rather than based solidly in its institutional mission towards proving support when needed.
  28. 28.  Microfinance programs, the NGO’s believe need to be inserted into the larger bank structure in such a way that they have relative independence and, at the same time, have the scale to handle thousands of small transactions efficiently.
  29. 29.  Banks need to acquire an appropriate financial methodology to service the microenterprise sector, that is, financial innovations that permit a cost-effective analysis of creditworthiness, the monitoring of a large number of relatively poor clients, and the adoption of effective collateral substitutes.
  30. 30.  Given that microfinance programs differ so radically from traditional banking, banks must recruit and retain specialized staff to manage these programs. Issues of recruitment, training, and performance- related incentives require special consideration.
  31. 31.  Microfinance programs are costly because of the small size of their loans and because banks cannot operate them with their traditional mechanisms and overhead structures. Strategies must be found to minimize processing costs, increase staff productivity, and rapidly expand the scale of their microenterprise portfolios.
  32. 32.  Banks must also communicate with banking authorities to ensure that reporting and regulatory requirements take into account the specialized nature of microfinance programs
  33. 33.  Anassociation in definition is an organized body of people with a formal structure who have an interest, activity, or purpose towards a common goal. There is such an organization in the banking industry of Malaysia. This association is known as the Association of Banks in Malaysia (ABM) and the Association was formed in November 1973 according to
  34. 34.  To establish and promote a sound banking system for commercial banks in Malaysia in cooperation with Bank Negara Malaysia and relevant authorities. To promote orderliness and ethical banking practices among member banks. To improve consumer awareness and knowledge of banking products and services.
  35. 35.  TheAssociation aims at facilitating a conducive banking environment, promoting orderliness and ethical banking practices covering a wide scope involving operations policies; human capital development; consumer education and awareness; risk management; and regional activities.
  36. 36.  The association, according to has 24 member banks currently and that number comprises of 8 domestic banks as well as 16 locally incorporated foreign banks;
  37. 37.  Affin Bank Berhad Alliance Bank Malaysia Berhad Ambank Berhad CIMB Bank Berhad Eon Bank Berhad Hong Leong Bank Berhad Malayan Banking Berhad Public Bank Berhad RHB Bank Berhad
  38. 38.  Bangkok Bank Berhad Bank of America Malaysia Berhad Bank of China (Malaysia) Berhad Bank of Tokyo-Mitsubishi UFJ Berhad BNP Paribas Malaysia Berhad CitiBank Verhad Deutsche Bank (Malaysia) Berhad HSBC Bank (Malaysia) Berhad
  39. 39. THANK YOU