1 CHAPTER I PRELIMINARY-1. Short title.

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

2 CHAPTER I PRELIMINARY-2. Amendments of Ordinance and Acts.

The Central Bank of Malaysia Ordinance 1958, the Finance Companies Act 1969, the Banking Act 1973 and the Islamic Banking Act 1983 are amended in the manner specified in Chapters II, III, IV and V respectively.

3 CHAPTER II AMENDMENTS TO THE CENTRAL BANK OF MALAYSIA ORDINANCE 1958-3. Amendment of section 2.

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

'"certificate of deposit" means a document relating to money, in any currency, which has been deposited with the issuer or some other person, being a document which recognises an obligation to pay a stated amount to bearer or to order, with or without interest, and being a document by the delivery of which, with or without endorsement, the right to receive that stated amount, with or without interest, is transferable;'.

4 CHAPTER II AMENDMENTS TO THE CENTRAL BANK OF MALAYSIA ORDINANCE 1958-4. 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 approval of the Minister, out of the funds of the Bank, create and maintain a trust account to be called "the Bank Negara Malaysia Staff Welfare Account" for the benefit of its officers and employees, including their dependents.".

5 CHAPTER II AMENDMENTS TO THE CENTRAL BANK OF MALAYSIA ORDINANCE 1958-5. Amendment of section 30.

Subsection (1) of section 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) :

" (mmmm) 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

6 CHAPTER III AMENDMENTS TO THE FINANCE COMPANIES ACT 1969-6. Amendment of section 3A.

Subsection (1) of section 3A 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

(c) by deleting the words "after the 31st December 1979," in subsection (1).

7 CHAPTER III AMENDMENTS TO THE FINANCE COMPANIES ACT 1969-7. Amendment of section 21.

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

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

(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 em

8 CHAPTER III AMENDMENTS TO THE FINANCE COMPANIES ACT 1969-8. New section 21B.

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

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

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

(a) that the advance, loan or credit facility meets the standards of credit worthiness 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;

(c) that the grant of the advance, loan or credit facility will serve the best interest of the licensed finance company;

(d) that the advance, loan or credit facility has been approved by the votes of not less than tw

9 CHAPTER III AMENDMENTS TO THE FINANCE COMPANIES ACT 1969-9. Amendment of section 23.

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

(a) by deleting paragraph (a) , (b) and (d) ; and

(b) by substituting for paragraph (e) the following new paragraph (e) :

" (e) any corporation or public company referred to in subsection (4) of section 21;"

10 CHAPTER IV AMENDMENTS TO THE BANKING ACT 1973-10. Amendment of section 21.

Section 21 of the Banking Act 1973 is amended-

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

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

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

(c) by substituting for the words "paragraph (ca) " the words "paragraphs (ca) and (cb) " in subsection (2).

11 CHAPTER V AMENDMENT TO THE ISLAMIC BANKING ACT 1983-11. Amendment of section 19.

Section 19 of the Islamic Banking Act is amended-

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

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

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

(c) by substituting for the words "paragraph (d) " the words "paragraphs (d) and (da) " in subsection (2).