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Finance (Banking and Financial Institutions) Act 1986

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Unannotated Statutes of Malaysia - Principal Acts/FINANCE (BANKING AND FINANCIAL INSTITUTIONS) ACT 1986 Act 330/FINANCE (BANKING AND FINANCIAL INSTITUTIONS) ACT 1986 ACT 330

Incorporating all amendments up to 1 January 2007

Date of Royal Assent ... ... ... ... ...	29 December 1986
Date of publication in the Gazette ... ... ...	31 December 1986
Date of coming into operation ... ...	1 January 1987

ACT 330
FINANCE (BANKING AND FINANCIAL INSTITUTIONS) ACT 1986

Chapter I PRELIMINARY

SECTION

1.Short title

2.Amendments of Ordinance and Acts

Chapter II AMENDMENTS TO THE CENTRAL BANK OF MALAYSIAORDINANCE 1958

SECTION

3.Amendment of section 2

4.Amendment of section 15

5.Amendment of section 30

Chapter III AMENDMENTS TO THE FINANCE COMPANIES ACT 1969

SECTION

6.Amendment of section 3a

7.Amendment of section 21

8.New section 21b

9.Amendment of section 23

Chapter IV AMENDMENTS TO THE BANKING ACT 1973

SECTION

10.Amendment of section 21

Chapter V AMENDMENTS TO THE ISLAMIC BANKING ACT 1983

SECTION

11.Amendment of section 19

An Act to amend the Central Bank of Malaysia Ordinance 1958, the Finance Companies Act 1969, the Banking Act 1973 and the Islamic Banking Act 1983.

[1 January 1987]

BE IT ENACTED by the Seri Paduka Baginda Yang di-Pertuan Agong with the advice and consent of the Dewan Negara and Dewan Rakyat in Parliament assembled, and by the authority of the same, as follows:

Unannotated Statutes of Malaysia - Principal Acts/FINANCE (BANKING AND FINANCIAL INSTITUTIONS) ACT 1986 Act 330/FINANCE (BANKING AND FINANCIAL INSTITUTIONS) ACT 1986 ACT 330,,/1.Short title

1. Short title

This Act may be cited as the Finance (Banking and Financial Institutions) Act 1986.

Unannotated Statutes of Malaysia - Principal Acts/FINANCE (BANKING AND FINANCIAL INSTITUTIONS) ACT 1986 Act 330/FINANCE (BANKING AND FINANCIAL INSTITUTIONS) ACT 1986 ACT 330,,/2.#Amendments of Ordinance and Acts

2.# Amendments of Ordinance and Acts

^#The Central Bank of Malaysia Ordinance 1958 [Ord. No. 61 of 1958], ^@ the Finance Companies Act 1969 [Act 6], the ^*Banking Act 1973 Act 102] and the Islamic Banking Act 1983 [Act276] are amended in the manner specified in Chapters II, III, IV and V respectively.

3. Amendment of section 2

Section 2 of the Central Bank of Malaysia Ordinance 1958, which in this Chapteris referred to as "the Ordinance", is amended by inserting after theinterpretation of "Board" the following new interpretation of "certificateof deposit":

' "certificate of deposit"

means a document relating to money, in any currency,which has been deposited with the issuer or some other person, beinga document which recognizes an obligation to pay a stated amount tobearer or to order, with or without interest, and being a documentby the delivery of which, with or without endorsement, the right toreceive that stated amount, with or without interest, is transferable;'.

4. Amendment of section 15

Section 15 of the Ordinance is amended by inserting after subsection (4) the following new subsection (5):

"(5) Subject to section 49, the Bank may, with the approvalof the Minister, out of the funds of the Bank, create and maintaina trust account to be called "the Bank Negara Malaysia Staff WelfareAccount" for the benefit of its officers and employees, includingtheir dependents.".

5. Amendment of section 30

Subsection (1) ofsection 30 of the Ordinance is amended--

(a) by substituting for the word "three" the word "twelve" wherever it appears in paragraphs (e) and (l);

(b) by substituting for the word "six" the word "twelve" in paragraph (f) ;

(c) by inserting after the word "months" the words "or such period as may be approved by the Minister on the recommendation of the Board" wherever it appears in paragraphs (e), (f) and (l);

(d) by inserting after the words "the Government" the words "or the Bank" in paragraph (fff);

(e) by inserting after paragraph (mmm) the following new paragraph (mmmm):

"(mmm) establish a central bureau to collect, in such manner and to the extent as the Bank may think fit, information on and relating to rejection by a paying bank of any cheque for reason of insufficient funds in the account of the drawer of the cheque, and to disclose any such information to any bank for the purpose only of assisting the bank to assess the eligibility of the drawer to maintain or open any current account with the bank;"; and

(f) by inserting after paragraph (n) the following new paragraphs (nn) and (nnn):

"(nn) place deposits in any bank or finance company licensed under the Finance Companies Act 1969 within the Federation;

(nnn) purchase, under repurchase agreements, and subject to such terms as may be approved by the Minister on the recommendation of the Bank, and sell any certificate of deposit issued by any bank or finance company licensed under the Finance Companies Act 1969;".

6. Amendment of section 3a

a(1) of the Finance Companies Act 1969, which in this Chapter is referred to as "the principal Act", is amended--

(a) by inserting after the words "such person" the words "either in the national language or in English or in any other language" wherever they appear in paragraphs (a) and (b);

(b) by substituting for the comma a fullstop at the end of paragraph (b); and

7. Amendment of section 21

The principal Act is amended by substituting for section 21 the following new section 21:

"Prohibition of advances, loans or credit facilities to directors, officers and employees

21.(1) Unless otherwise exempted by the Central Bank, with or without conditions, or except as provided under subsection (2) or (4), no licensed finance company shall grant advances, loans or credit facilities to--

(a) any of its directors, officers or employees or other persons being persons receiving remuneration from it (other than accountants, advocates and solicitors, architects, estate agents, doctors and any other persons receiving remuneration from it in respect of their professional services);

(b) any firm in which any of its directors, officers or employees is interested as partner, manager, agent or guarantor;

(c) any corporation in which any of its officers or employees is a director, manager, agent or guarantor, or any corporation in the shares of which any of its officers or employees has any material interest as determined by the Central Bank;

(d) any corporation in which any of its directors (not being an executive director, he being within the ambit of the provisions of paragraph (c) pursuant to subsection (3)) is a member, director, manager, agent or guarantor, or any corporation in the shares of which any such director of the licensed finance company has any interest whatsoever directly or indirectly; or

(e) any individual for whom any of its directors, officers or employees is a guarantor.

(2) A licensed finance company may grant to any of its officers or employees loans which are provided under its appropriate scheme of service and, where the licensed finance company is satisfied that special or compassionate circumstances exist, a loan not exceeding at any one time six months' remuneration of that officer or employee on such terms and conditions as the licensed finance company thinks fit.

(3) The provisions of paragraph (1)(c) and of subsection (2) shall also apply to the executive directors of licensed finance company.

(4) The provisions of paragraph (1)(d) shall not apply to the granting of advances, loans or credit facilities by a licensed finance company to--

(a) a corporation which is listed on a recognized stock exchange and in the shares of which no director of that licensed finance company has, directly or indirectly, any material interest as determined by the Central Bank; and

(b) a public company in which a director of that licensed finance company has no interest in his personal capacity, as determined by the Central Bank:

Provided that for the purposes of this subsection the director concerned is not an executive director of that licensed finance company.

(5) Any licensed finance company which has entered into any transaction prohibited under this section shall not later than 30 June 1988 or such further period as the Central Bank may specify in any particular case secure the repayment of such advance, loan or credit facility

(6) For the purposes of this section, "director", "officer" or "employee" includes a spouse, parent or child of a director, an officer or employee.".

Unannotated Statutes of Malaysia - Principal Acts/FINANCE (BANKING AND FINANCIAL INSTITUTIONS) ACT 1986 Act 330/FINANCE (BANKING AND FINANCIAL INSTITUTIONS) ACT 1986 ACT 330,,/8.New section 21b

8. New section 21b

The principal Act is amended by inserting after section 21A the following new section 21B:

"Restriction on grant of loan, advance or credit facility under section 21

21B. No licensed finance company shall grant any advance, loan or credit facility under the exemption referred to in subsection 21(4) unless the following conditions are satisfied:

(a) that the advance, loan or credit facility meets the standards of creditworthiness required of other applicant borrowers;

(b) that the terms of the advance, loan or credit facility are not less favourable to the licensed finance company than those offered to others;

(d) that the advance, loan or credit facility has been approved by the votes of not less than two-thirds of all the other directors of the licensed finance company at a duly constituted meeting of the full board of directors and the approval has been recorded in the minutes of that meeting.".

9. Amendment of section 23

Subsection 23(1) of the principal Act is amended--

(a) by deletingparagraphs (a), (b) and (d); and

(b) by substitutingfor paragraph (e) the following newparagraph (e):

(e) any corporation or public companyreferred to in subsection 21(4);".

10. Amendment of section 21

Section 21 of the Banking Act 1973 is amended--

(a) by deleting the word "and" after the words "Central Bank;" in paragraph (1)(ca);

(b) by inserting after paragraph (1)(ca) the following new paragraph (cb):

(cb) notwithstanding the provisions of subsection 36(2), a statement showing such information relating to its customers as is required for the purposes of the central bureau established under paragraph 30(1)(mmmm) of the Central Bank of Malaysia Ordinance 1958; and"; and

11. Amendment of section 19

Section19 of the Islamic Banking Act is amended--

(a) by deleting the word "and" after the words "Central Bank;" at the end of paragraph (1)(d);

(b) by inserting after paragraph (1)(d), the following new paragraph (da):

(da) " notwithstanding the provisions of subsection 34(3), a statement showing such information relating to its customers as is required for the purposes of the central bureau established under paragraph 30(1)(mmmm) of the Central Bank of Malaysia Ordinance 1958; and"; and

Unannotated Statutes of Malaysia - Principal Acts/FINANCE (BANKING AND FINANCIAL INSTITUTIONS) ACT 1986 Act 330/FINANCE (BANKING AND FINANCIAL INSTITUTIONS) ACT 1986 ACT 330,,/LIST OF AMENDMENTS