Banking in Malaysia
Banks. A place where it is good to be rich and it is good for someone who wants to be rich. So that's what they tell people.
So what is a bank and how does a bank work? Can anyone just declare that they want to open a bank?
At the very basic, there are different types of banks in Malaysia. Each serve different segments of our society and each have different business model and focus. Let's have a look at these banks from some of the regulatory framework governing these banks.
Commercial Banks
Commercial banks are the most common type of banks that can be found in Malaysia. These banks serve an array of customers, ranging from retail individual customers all the way to large multinational corporations. The array of products offered by these banks range from basic banking deposit products to highly complex structured deposits. In terms of services, they provide remittance services be it locally or to other countries.
Commercial banks are governed by Financial Services Act 2013, better known as FSA 2013. They are classified into local banks and locally incorporated foreign banks.
Commercial banks are the oldest banks in Malaysia, with Standard Chartered setting up the first Bank in Malaysia in 1875.
Depending on the services a commercial bank offers, the activities of a banks can also be governed under different regulator.
List of Commercial Banks in Malaysia can be found at this link. (L denotes local bank while F denotes locally incorporated foreign banks).
Depending on the services a commercial bank offers, the activities of a banks can also be governed under different regulator.
List of Commercial Banks in Malaysia can be found at this link. (L denotes local bank while F denotes locally incorporated foreign banks).
Islamic Banks
Islamic banks are basically commercial banks that is administered based on Islamic law known as Shariah. The types of services and products offered by Islamic banks are similar to conventional commercial banks.
In the past, Islamic banking services were operated via window system by commercial banks. These days, many of these banks have graduated to full-fledged Islamic bank operating as subsidiaries to conventional commercial banks. The future is very bright for those who are willing to go into Islamic banks with some areas yet to be explored by Islamic banks.
In term of governance, Islamic banks are governed by Islamic Financial Services Act 2013 or IFSA 2013.
List of Islamic Banks in Malaysia can be found here and here.
Investment Banks
Investment banks are banks that are involved in capital market. Their customer base are large corporations, including other financial institutions and conglomerates. Some investment banks too have individual customers in the form of very high net-worth customers.
As investment banks are involved in capital markets including money market and futures, they are governed by Capital Market and Services Act (CMSA) on top of FSA / IFSA.
As these banks are involved in trading of financial products, many of their employees require specific licensing.
List of Investment Banks in Malaysia can be found here.
Development Financial Institutions
Development Financial Institutions or DFI are financial institutions that are incorporated for specific purposes. There are several financial institutions in Malaysia which are classified as DFIs. DFIs are governed under Development Financial Institutions Act 2002. List of DFIs can be found here.
Note that those listed here are prescribed DFIs. Prescribed DFIs mean they are classified as Reporting Institution under Anti-Money Laundering, Anti-Terrorism Financing, Proceeds of Unlawful Activities 2001 (AMLATFPUAA). Non-prescribed DFI are not required to submit under AML regime. List of non-prescribed DFI are as follows.
Can Anyone open a Bank in Malaysia?
Hmmmm... tough question. I won't be able to answer that question. First, you would need to check with Bank Negara Malaysia if you are allowed to open a Bank. And you must have enough cash to make sure your bank have enough liquidity to stay afloat.
That being said, the most important bank in Malaysia is not any of the commercial or investment banks I had mentioned earlier, but our Central Bank, Bank Negara Malaysia. And that would be an article for another day.
List of Islamic Banks in Malaysia can be found here and here.
Investment Banks
Investment banks are banks that are involved in capital market. Their customer base are large corporations, including other financial institutions and conglomerates. Some investment banks too have individual customers in the form of very high net-worth customers.
As investment banks are involved in capital markets including money market and futures, they are governed by Capital Market and Services Act (CMSA) on top of FSA / IFSA.
As these banks are involved in trading of financial products, many of their employees require specific licensing.
List of Investment Banks in Malaysia can be found here.
Development Financial Institutions
Development Financial Institutions or DFI are financial institutions that are incorporated for specific purposes. There are several financial institutions in Malaysia which are classified as DFIs. DFIs are governed under Development Financial Institutions Act 2002. List of DFIs can be found here.
Note that those listed here are prescribed DFIs. Prescribed DFIs mean they are classified as Reporting Institution under Anti-Money Laundering, Anti-Terrorism Financing, Proceeds of Unlawful Activities 2001 (AMLATFPUAA). Non-prescribed DFI are not required to submit under AML regime. List of non-prescribed DFI are as follows.
Can Anyone open a Bank in Malaysia?
Hmmmm... tough question. I won't be able to answer that question. First, you would need to check with Bank Negara Malaysia if you are allowed to open a Bank. And you must have enough cash to make sure your bank have enough liquidity to stay afloat.
That being said, the most important bank in Malaysia is not any of the commercial or investment banks I had mentioned earlier, but our Central Bank, Bank Negara Malaysia. And that would be an article for another day.
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