Banking And Financial Institutional Act Essay

1157 Words Aug 13th, 2016 5 Pages
CHAPTER ONE
INTRODUCTION

1.1 Introduction

Banking and Financial Institutional Act 1989 (BAFIA 1989) define the bank as a person which carries on banking business. A bank is a financial intermediary which accepts deposits and channels those deposits into lending activities. The lending activities can be carried out either directly or through capital markets. Bank act as payment agents by conducting and checking current accounts for customers, paying cheques drawn by customers on the bank, and collecting cheques deposited to customer’s current accounts. In other word, bank is a financial institution which collects money as deposits from customers and uses the same to grant loans to other customers. It acts as a bridge between people who have surplus cash and pass it on to people who are in need of it. It pays an interest to deposit customers and receives an interest from loan customers and makes a profit through a difference in both.
Malaysian banking system can be classified into three main types, there are commercial banks which consist of domestic and foreign, finance companies and the merchant banks. The main players in the banking system are commercial banks since they are the largest and most significant funds providers in the banking system. Besides, commercial banks in Malaysia not only enjoy the widest scope of permissible activities but also able to engage in a full range of banking services.
In Malaysia, as at the end of November 2013, there are total of 27…

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