[NOTE: This Act has been repealed by Act 701 except Part III which
continues to be in force.]

LAWS OF MALAYSIA

Act 519

Central Bank of Malaysia
Act 1958

(Revised—1994)

Revised up to 31-Mar-1994

Date of publication in the Gazette 12-May-1994

Date of coming into force of
revised version 18-May-1994

An Act to provide for the establishment, administration,
powers and duties of a Central Bank of Malaysia.

[Part III and section 30 (1) (a)—
12th June 1967—Throughout

Malaysia;

P.U. 241/67.

Remaining provisions—
West Malaysia—26th January

1959;
      Sabah and Sarawak—21st
January 1965.]

L.N. 12/59.
Act 16/65.

ARRANGEMENT OF SECTIONS

PART I

PRELIMINARY

1. Short title.

2. Interpretation.

PART II

ESTABLISHMENT, CAPITAL AND

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ADMINISTRATION OF THE BANK

3. Establishment of Bank.

4. Principal objects of Bank.

5. Offices of the Bank.

6. Capital.

7. General Reserve Fund.

8. Board of Directors.

9. Governor and Deputy Governor.

10. Appointment of directors.

11. Disqualification of directors.

12. Vacancies in the office of Governor or Deputy Governor or
of another director.

13. Meetings and acts of the Board.

14. Director’s interest in contract to be made known.

15. Officers and employees of the Bank.

16. Preservation of secrecy.

16A. Bank’s power to report suspected offence.

16B. Establishment of Syariah Advisory Council.

17. Remuneration not to be related to profits.

PART III

CURRENCY

18. Unit of currency.

19. Parity.

20. Right to issue bank notes and coin.

21. Power to buy and sell Malaysian currency.

22. Printing of notes, minting of coins and issue of notes and
coins.

23. Denominations and forms of notes and coins.

24. Legal tender.

25. Coins tampered with or notes defaced.

26. Withdrawal of notes and coins and their disposal.

27. Refund of lost or imperfect notes or coins.

27A. Restriction on the use of photographs, drawing or design of
note or coin in advertisements, etc.

PART IV

2

RESERVE OF EXTERNAL ASSETS

28. Reserve of external assets.

29. External reserves as proportion of Bank’s liabilities.

PART V

BUSINESS OF THE BANK

30. Authorized business of Bank.

30A. Establishment of body corporate for training, financial
counselling, payment systems, etc.

31. Business which Bank may not transact.

31A. Loans to, and acquisition of, banking and other financial
institutions.

31B. Power of Bank to make an order in respect of a deposit-
taker to protect the interests of its depositors, etc.

31C. Power to reduce share capital and to cancel shares of
financial institution.

PART VI

RELATIONS WITH THE GOVERNMENT

32. Bank as a banker to the Government.

33. Temporary advances to the Government.

34. Issues of policy.

PART VII

RELATIONS WITH BANKING AND OTHER
FINANCIAL INSTITUTIONS

35. Co-operation with banking institutions and other financial
institutions.

36. (Repealed).

37. Recommendations to banking institutions, other financial
institutions or institutions or persons as specified in
paragraphs (a), (b), (c), (d) and (e).

38. Recommendations to persons or classes of persons (other
than banking institutions).

39. Directions to banking institutions, etc.

40. Saving in respect of sections 37 to 39.

41. No discrimination in directions.

42. Special loans to banking and other financial institutions.

43. Clearing Houses and settlement of balances between
banking and other financial institutions.

3

44. (Repealed).

PART VIII

GENERAL

44A. Interpretation.

44B. Bank may establish systems for funds, debt securities, etc.

44C. Bank may require information relating to debt securities.

44D. Bank may prohibit certain activities.

45. Bank’s financial year.

46. Audit.

47. Return of assets and liabilities.

48. Preparation and publication of annual report and balance
sheet.

49. Loans and scholarships to officers and employees, and
scholarships and study loans to other persons.

49A. Power to appoint Attorney.

50. (Repealed).

51. Penalties.

51A. Power of Governor to compound.

52. Fiat of Public Prosecutor.

53. Jurisdiction.

53A. Bank may be represented by director, officer or employee
of Bank in civil proceedings.

54. Power of Bank to make regulations.

54A. Fees and charges.

55. (Omitted).

PART IX

EXTENSION OF JURISDICTION

56. Special provision relating to extension of jurisdiction, etc.,
of the Bank.

PART I

PRELIMINARY

Short title. 1.   This Act may be cited as the Central Bank of Malaysia
Act 1958.

   (Proviso omitted).

4

Interpretation. 2.   In this Act, unless the context otherwise requires—
Act 372.
Act 276. “bank”, in relation to Malaysia, means a licensed bank as

defined in the Banking and Financial Institutions Act 1989
or an Islamic bank, and in relation to any country, territory
or place outside Malaysia means a person lawfully carrying
on therein business corresponding in whole or in part or in
substance to “banking business” as defined in the Banking
and Financial Institutions Act 1989, or to “Islamic banking
business” as defined in the Islamic Banking Act 1983;

“Bank” or “Central Bank” means the Central Bank of
Malaysia established by section 3;

“banking institution” means a licensed bank, a licensed
merchant bank or a licensed finance company as defined in
the Banking and Financial Institutions Act 1989 or an
Islamic bank;

“Board” means the Board of Directors of the Central
Bank;

“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;

“Deputy Governor” means any Deputy Governor of the
Central Bank;

“director” means a director appointed under section 10,
and includes the Governor or Deputy Governor;

“Governor” means the Governor of the Central Bank;

“investment account liabilities” in relation to an Islamic
bank means the deposit liabilities at that bank in respect of
funds placed by a depositor with that bank for a fixed
period of time under an agreement to share the profits or
losses of that bank on the investment of such funds;

Act 276. “Islamic bank” means a bank licensed under the Islamic
Banking Act 1983;

“licensed institution” has the meaning assigned thereto in
the Banking and Financial Institutions Act 1989;

“Minister” means the Minister charged with the
responsibility for finance;

“other deposit liabilities” in relation to a banking
institution other than an Islamic bank means deposit
liabilities at that banking institution other than savings
account, sight and time liabilities and deposit liabilities

5

from another banking institution or the Central Bank; and
in relation to an Islamic bank means deposit liabilities at
that bank other than savings account, investment account,
sight and time liabilities and deposit liabilities from another
banking institution or the Central Bank;

“other financial institution” means—
Act 372. (a) any licensed discount house, licensed money-

broker, or scheduled institution, or
representative office, as defined in the Banking
and Financial Institutions Act 1989;

(b) any non-scheduled institution, as defined in the
aforesaid Act, which is engaged in the
“provision of finance” as this expression is
defined in that Act; or

(c) such other person as may be specified by the
Bank, from time to time, by notice published in
the Gazette;

“record of balance of payments” means a record of such
economic and financial transactions of Malaysia, whether
direct or indirect, howsoever, wheresoever, or by
whosoever, made, in relation to countries, territories or
places outside Malaysia as the Bank may, from time to
time, determine for the purpose of being included in such
record;

“savings account liabilities” in relation to a banking
institution means the total deposits at that banking
institution which normally require the presentation of
passbooks or such other documents in lieu of passbooks as
approved by the Central Bank for the deposit or withdrawal
of monies;

“sight liabilities” in relation to a bank means the total
deposits at that bank which are repayable on demand, but
does not include savings account liabilities or the deposits
of any other banking institution or of the Central Bank at
that bank;

“Syariah Advisory Council” means the Syariah Advisory
Council established under subsection 16B(1);

Act A1213.

“time liabilities” in relation to a banking institution
means the total deposits at that banking institution which
are repayable otherwise than on demand, but does not
include savings account liabilities or the deposits of any
other banking institution or of the Central Bank at that
banking institution.

PART II

ESTABLISHMENT, CAPITAL AND
ADMINISTRATION OF THE BANK

6

Establishment of
Bank.

3.   There shall be established a bank, to be called “Bank
Negara Malaysia” or, in English, “Central Bank of
Malaysia”, which shall be a body corporate and shall have
perpetual succession and a common seal and may sue and
be sued in its own name.

Principal objects of
Bank.

4.   The principal objects of the Bank shall be—

(a) to issue currency in Malaysia and to keep
reserves safeguarding the value of the currency;

(b) to act as a banker and a financial adviser to the
Government;

(c) to promote monetary stability and a sound
financial structure;

(ca) to promote the reliable, efficient and smooth
operation of national payment and settlement
systems and to ensure that the national payment
and settlement systems policy is directed to the
advantage of Malaysia; and

Act A1213.

(d) to influence the credit situation to the advantage
of Malaysia.

Offices of the Bank. 5.   (1)   The Bank shall have its Head Office in Kuala
Lumpur.

  (2)   The Bank may open branches and appoint agents and
correspondents within and without Malaysia.

Capital. 6.   (1)   The authorized capital of the Bank shall be two
hundred million ringgit.

  (2)   Twenty million ringgit of the authorized capital shall
be subscribed and paid up by the Government on the
establishment of the Bank.

  (3)   The paid up portion of the authorized capital may be
increased by such amount as the Minister may approve
from time to time and the Government shall subscribe and
pay the amount of the increase to the Bank:

   Provided that the payment of the increase in capital may
be made by way of such transfers from the General Reserve
Fund as the Minister may from time to time approve.

General Reserve
Fund.

7.   (1)   There shall be a General Reserve Fund of the
Bank.

  (2)   At the end of each financial year, the net profit of the

7

Bank for that year shall be determined after allowing for
the expenses of operation and after provision has been
made for bad and doubtful debts, depreciation in assets,
contributions to staff and pension funds and such other
contingencies as are usually provided for by banks.

  (3)   The net profit of the Bank shall be dealt with as
follows:

(a) such amount as the Minister, after consultation
with the Board, so determines shall be placed to
the credit of the General Reserve Fund; and

(b) the remainder shall be paid to the Government:

   Provided that—

(i) in the case of any year at the end of which the
General Reserve Fund is less than half the paid
up capital of the Bank, the whole of the net
profit shall be credited to the General Reserve
Fund; and

(ii) in the case of any year at the end of which the
General Reserve Fund is not less than half the
paid up capital of the Bank, but less than twice
the paid up capital of the Bank, not less than
thirty per centum of the net profit shall be
credited to the General Reserve Fund.

Board of Directors. 8.   (1)   There shall be a Board of Directors constituted as
provided in this section, which shall be responsible for the
policy and general administration of the affairs and
business of the Bank.

  (2)   The Board of Directors of the Bank shall consist of—

(a) the Governor;

(b) not more than three Deputy Governors; and

(c) not less than five but not more than eight
directors appointed under section 10.

  (3)   The Governor or, during any period of his absence or
inability to act from illness or any other cause, any Deputy
Governor so designated by the Governor, shall be entrusted
with the day-to-day administration of the Bank, and may,
subject as is expressly stated in this Act, give decisions and
exercise all powers and do all acts which may be exercised
or done by the Bank.

  (4)   The Governor and the Deputy Governors shall be
answerable to the Board for their acts and decisions.

  (5)   In the event of the absence or inability to act of the
Governor or any Deputy Governor during his term of office
the Minister may appoint a person to discharge the duties
of such office during the period of such absence or

8

inability; and while so acting the person so appointed by
the Minister shall act as an ex-officio member of the Board.

Governor and Deputy
Governor.

9.   (1)   The Governor shall be appointed by the Yang di-
Pertuan Agong and the Deputy Governors by the Minister.

  (2)   The Governor and the Deputy Governors shall each
be appointed for a term not exceeding five years and shall
be eligible for reappointment.

  (3)   The Governor and Deputy Governor shall devote the
whole of their professional time to the service of the Bank
and while holding office shall not occupy any other office
or employment whether remunerated or not:

Note.

   Provided that they may if so appointed with the approval
of the Minister—

(a) act as members of any committee or
commission appointed by the Government to
enquire into any matter affecting currency,
banking, economic or financial matters in
Malaysia;

(b) become directors, governors or members of the
board, by whatever name called, of any
international bank or international monetary
authority to which the Government shall have
adhered or given support or approval;

(c) become directors of any corporation in Malaysia
in which the Bank may participate under section
30 (1)(j);

Act 125. (d) become directors or members of the board of
management, by whatever name called, of any
statutory authority or of any company as defined
in section 4 (1) of the Companies Act 1965.

  (4)   The Governor and the Deputy Governors shall be
appointed on such terms and conditions as may be provided
for in their respective letters of appointment.

Note.

  (5)   Notwithstanding anything contained in the foregoing
provisions of this section, or in any other provision of this
Act, it shall be lawful for the Governor or the Deputy
Governors to be appointed by any written law to exercise
such powers, discharge such duties, and perform such
functions as may be specified in or under such written law,
and to be conferred by such written law with such title of
office in relation thereto as may be specified in such
written law.

Appointment of
directors.

10.   (1)   The directors referred to in section 8 (2) (c) shall
be appointed by the Yang di-Pertuan Agong.

9

  (2)   The directors appointed under subsection (1) shall be
persons of standing and experience in affairs, and as
directors of the Bank shall not act as delegates on the
Board from any commercial, financial, agricultural,
industrial or other interests with which they may be
connected:

   Provided that the said prohibition shall not extend to any
directors holding or for the time being acting in the office
of Secretary General to the Treasury or Deputy Secretary
General to the Treasury.

  (3)   A director appointed under subsection (1) shall hold
office for a term not exceeding three years and shall be
eligible for reappointment.

  (4)   The directors appointed under subsection (1) shall be
paid by the Bank such remuneration and allowances as may
be prescribed by the Minister.

Disqualification of
directors.

11.   (1)   No person shall be appointed or shall remain as
Governor, Deputy Governor or other director of the Bank
who—

(a) is or becomes a member of the Senate or House
of Representatives or any Legislative Assembly;

Act 372. (b) is or becomes an “officer” or, subject to section
9 (3), a “director” (as those words are defined in
the Banking and Financial Institutions Act 1989)
of any banking institution or other financial
institution; or

(c) is or becomes a public officer:

   Provided that one of the directors appointed under section
10 may be the person holding the office of Secretary
General to the Treasury or Deputy Secretary General to the
Treasury, and notwithstanding section 10 (3) any director
so appointed shall remain a member of the Board for so
long as he holds the office of Secretary General to the
Treasury or Deputy Secretary General to the Treasury, as
the case may be, or for such lesser time as may be provided
in his letter of appointment.

  (2)   The Yang di-Pertuan Agong may terminate the
appointment of the Governor, or any other director if he—

(a) resigns his office;

(b) becomes of unsound mind or incapable of
carrying out his duties;

(c) becomes bankrupt or suspends payment or
compounds with his creditors;

(d) is convicted by a court of law in Malaysia of an
offence and sentenced to imprisonment for a

10

term of not less than two years, or of any
offence involving dishonesty, and has not
received a free pardon;

(e) is guilty of serious misconduct in relation to his
duties;

(f) is absent, except on leave granted by the
Minister, from all meetings of the Board held
during two consecutive months or during any
three months in any period of twelve months;

LN 280/1959.

(g) fails to comply with his obligations under
section 14.

  (3)   The Minister may terminate the appointment of any
Deputy Governor on the grounds specified in subsection
(2).

Vacancies in the
office of Governor or
Deputy Governor or
of another director.

12.   If the Governor or any Deputy Governor or any other
director dies or resigns or otherwise vacates his office
before the expiry of the term for which he has been
appointed another person may be appointed by the Yang
di-Pertuan Agong, or in the case of a Deputy Governor, by
the Minister, for the unexpired period of the term of office
of the person in whose place he is appointed.

Meetings and acts of
the Board.

13.   (1)   The Governor, or in his absence any Deputy
Governor so designated by the Governor, shall be the
chairman of the Board.

  (2)   The chairman of the Board shall summon meetings
as often as may be required but not less frequently than
once in each month.

  (3)   At every meeting of the Board a quorum shall consist
of four directors, and decisions shall be adopted by a
simple majority of the votes of the directors present and
voting:

   Provided that in the case of an equality of votes, the
chairman shall have a casting vote.

Director’s interest in
contract to be made

known.

14.   (1)   A director who is directly or indirectly interested
in a contract made, or proposed to be made, by the Bank
shall disclose the nature of his interest at the first meeting
of the Board at which he is present after the relevant facts
have come to his knowledge.

  (2)   A disclosure under subsection (1) shall be recorded
in the minutes of the Board and, after the disclosure, the
director—

(a) shall not be present at, or take part in, any
deliberation or decision of the Board with

11

respect to that contract; and

(b) shall be disregarded for the purpose of
constituting a quorum of the Board for any such
deliberation or decision.

  (3)   No act or proceeding of the Board shall be
questioned on the ground of the contravention by a member
of the Board of this section.

Officers and
employees of the

Bank.

15.   (1)   The Bank may appoint such officers and
employees as it considers to be necessary for the efficient
conduct of the business of the Bank.

  (2)   Officers and employees of the Bank shall hold office
for such period or periods, receive such salaries and
allowances, and be subject to such other terms and
conditions of service as may be determined by the Board.

  (3)   The Bank may, with the approval of the Minister, out
of the funds of the Bank establish and maintain a pension
and provident fund for its officers and employees and their
dependents.

   In this subsection, the expression “officers” includes the
Governor and Deputy Governors.

  (4)   Where officers or employees of the Bank have been
seconded or transferred to the service of the Bank from or
have previously been in the service of the Federal or a State
Government or other public authority approved by the
Board, the appointments of those officers or employees
shall, subject to any Federal or State law, be made in
accordance with such arrangements as to pensions and
allowance for previous service as the Board may determine.

  (5)   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 dependants.

  (6)   The Bank Negara Malaysia Staff Welfare Account
shall be utilised for such purposes conducive to the welfare
of the officers and employees of the Bank, including their
dependants, as may from time to time be provided in trust
directions to be issued by the Board with the approval of
the Minister, and such directions may provide for the
manner and the procedure for the making of the grants,
loans or other payments from such Account.

Preservation of
secrecy.

16.   Without prejudice to section 16A, except for the
purpose of the performance of his duties or the excercise of
his functions or when lawfully required to do so by any
court or under any law, no director, officer, or employee of

[sic]

12

the Bank, shall disclose to any person any information
relating to the affairs of the Central Bank or of a banking
institution or other financial institution or of a customer of
the Central Bank or of a banking institution or other
financial institution which he has acquired in the
performance of his duties or the exercise of his functions.

Bank’s power to
report suspected

offence.
Act 17.
Act 89.

Act 276.
Act 312.
Act 372.
Act 577.

16A.   (1) Where the Bank in the course of the exercise of
any of its powers, or the discharge of any of its duties, or
the performance of any of its functions, under this Act, the
Exchange Control Act 1953, the Insurance Act 1963, the
Islamic Banking Act 1983, the Takaful Act 1984, the
Banking and Financial Institutions Act 1989, the Money-
Changing Act 1998, or under any other written law
whatsoever, suspects any person to have committed any
offence under this Act, or any of the aforesaid Acts, or any
other written law whatsoever, it shall be lawful for the
Bank to give information of such commission to a police
officer in charge of a police station or to any other police
officer, or to convey any or all information in relation to
such offence to any banking institution, or to any other
financial institution or other person affected by such
offence, or to any authority or person having power to
investigate under, or enforce, the provision of the law
under which the offence is suspected by the Bank to have
been committed.

Act A1010.

  (2)   Subsection (1) shall have full force end effect,
notwithstanding anything inconsistent therewith, or
contrary thereto, in the Act and the Acts mentioned in
subsection (1) or in any other written law.

Establishment of
Syariah Advisory

Council

16B.   (1)   The Bank may establish a Syariah Advisory
Council, which shall be the authority for the ascertainment
of Islamic law for the purposes of Islamic banking
business, takaful business, Islamic financial business,
Islamic development financial business, or any other
business which is based on Syariah principles and is
supervised and regulated by the Bank.

Act A1213.

  (2)   The Syariah Advisory Council shall consist of such
members as may be appointed by the Minister, on the
recommendation of the Bank, from amongst persons who
have knowledge or experience or both in the Syariah and
also—

(a) banking;

(b) finance;

(c) law; or

(d) any other related discipline.

  (3)   If a judge of the High Court, the Court of Appeal or

13

the Federal Court, or a judge of the Syariah Appeal Court
of any State or Federal Territory, is to be appointed under
subsection (2), such appointment shall not be made
except—

(a) in the case of a judge of the High Court, the
Court of Appeal or the Federal Court, after
consultation with the Chief Justice; and

(b) in the case of a judge of the Syariah Appeal
Court of any State or Federal Territory, after
consultation with the Chief Syariah Judge of the
respective State or Federal Territory, as the case
may be.

  (4)   The Syariah Advisory Council shall have such
functions as may be determined by the Bank and shall
determine its own procedure.

  (5)   The members of the Syariah Advisory Council shall
be paid such remuneration and allowances as may be
determined by the Board from the funds of the Bank.

  (6)   Unless the Bank otherwise approves in writing, no
member of the Syariah Advisory Council shall become a
member of any Syariah advisory body of, or act as a
Syariah consultant or Syariah advisor of, or assume any
position or office to such effect for, or occupy any office or
employment whether remunerated or not with, any banking
institution or other financial institution.

  (7)   The Bank shall consult the Syariah Advisory Council
on Syariah matters relating to Islamic banking business,
takaful business, Islamic financial business, Islamic
development financial business, or any other business
which is based on Syariah principles and is supervised and
regulated by the Bank, and may issue written directives in
relation to those businesses in accordance with the advice
of the Syariah Advisory Council.

  (8)   Where in any proceedings relating to Islamic banking
business, takaful business, Islamic financial business,
Islamic development financial business, or any other
business which is based on Syariah principles and is
supervised and regulated by the Bank before any court or
arbitrator any question arises concerning a Syariah matter,
the court or the arbitrator, as the case may be, may—

(a) take into consideration any written directives
issued by the Bank pursuant to subsection (7); or

(b) refer such question to the Syariah Advisory
Council for its ruling.

  (9)   Any ruling made by the Syariah Advisory Council
pursuant to a reference made under paragraph (8)(b) shall,
for the purposes of the proceedings in respect of which the
reference was made—

14

(a) if the reference was made by a court, be taken
into consideration by the court in arriving at its
decision; and

(b) if the reference was made by an arbitrator, be
binding on the arbitrator.

  (10)   The Bank may establish a secretariat and such other
committees as it considers necessary to assist the Syariah
Advisory Council in the performance of its functions and
may appoint any of the officers of the Bank or any other
person to be a member of the secretariat or any of such
committees.

  (11)   Any request for consultation or reference for a
ruling of the Syariah Advisory Council under this Act or
any other law shall be submitted to the secretariat.

  (12)   In this section—

(a) “Islamic banking business” has the meaning
assigned thereto in the Islamic Banking Act
1983;

(b) “Islamic financial business” means financial
business whose aims and operations do not
involve any element which is not approved by
Syariah; and

(c) “takaful business” has the meaning assigned
thereto in the Takaful Act 1984.

Remuneration not to
be related to profits.

17.   No salary, fee, wage, or other remunerations, or
allowance, paid by the Bank shall be computed by
reference to the profits of the Bank.

PART III

CURRENCY

Unit of currency. 18.   (1)   The unit of currency in Malaysia shall be the
ringgit, which shall be divided into one hundred sen.

  (2)   Upon the coming into force of this section, every
contract, sale, payment, bill, note, instrument and security
for money and every transaction, dealing, matter and thing
whatsoever relating to money or involving the payment of,
or the liability to pay, any money which but for this
subsection would have been deemed to be made, executed,
entered into, done and had for, in and in relation to
Malaysian dollars shall be deemed instead to be made,
executed, entered into, done and had for, in and in relation
to ringgit.

15

Parity. 19.   (1)   The parity of the ringgit shall be determined by
the Minister on the recommendation of the Bank in terms
either of the currency or currencies of other members of the
International Monetary Fund, the Special Drawing Right,
the common denominator prescribed by the International
Monetary Fund under paragraph I of Schedule C to the
Articles of Agreement of the International Monetary Fund,
or any other denominator consistent with the obligations of
Malaysia under Article IV and Schedule C to the Articles
of Agreement of the International Monetary Fund:

   Provided that if and when the Bank notifies the
International Monetary Fund of the parity of the ringgit
upon the International Monetary Fund deciding under the
Articles of Agreement to introduce a widespread system of
exchange arrangements based on stable but adjustable par
values, such parity shall be published in the Gazette and
shall take effect accordingly.

  (2)   The parity of the ringgit may be changed to such an
extent as the Minister on the recommendation of the Bank
may determine.

  (3)   Any change under subsection (2) shall be published
in the Gazette and shall take effect accordingly in
substitution of the parity gazetted under subsection (1).

  (4)   Notwithstanding subsection (1), the Minister may
decide on the recommendation of the Bank that it is
necessary and expedient for Malaysia not to determine a
parity for the ringgit, but instead to apply any exchange
arrangement for the ringgit that is not inconsistent with the
Articles of Agreement of the International Monetary Fund,
including, but not limited to, the severing of the parity of
the ringgit to any currency or currencies or any
denominator.

Right to issue bank
notes and coin.

20.   The Bank shall have the sole right of issuing notes and
coin throughout Malaysia and neither the Government nor
the Government of any State nor any public authority, or
banking institution or other financial institution, or other
institution or persons shall issue currency notes, bank notes
or coin or any documents or tokens payable to bearer on
demand being documental tokens which, in the opinion of
the Bank, are likely to pass as legal tender.

Power to buy and sell
Malaysian currency.

21.   The Bank shall at its discretion buy and sell Malaysian
currency against gold or other currency eligible for
inclusion in the reserve of external assets specified under
section 28:

   Provided that the rate of exchange quoted for any such
transaction shall be consistent with the Articles of
Agreement of the International Monetary Fund.

16

Printing of notes,
minting of coins and

issue of notes and
coins.

22.      The Bank shall —

(a) arrange for the printing of notes and the minting
of coins;

(b) issue, re-issue and exchange notes and coins at
the Bank’s offices and at such agencies as the
Bank may, from time to time, establish or
appoint;

(c) arrange for the safe custody of unissued stocks
of currency and for the preparation, safe custody
and destruction of plates and paper for the
printing of notes and of dies for the minting of
coins.

Denominations and
forms of notes and

coins.

23.   (1)   Notes and coins issued by the Bank—

(a) shall be in such denominations of the ringgit or
fractions thereof as shall be approved by the
Minister on the recommendation of the Bank;

(b) shall be of such forms and designs and bear such
devices as shall be approved by the Minister on
the recommendation of the Bank.

  (2)   The standard weight and composition of coins issued
by the Bank and the amount of remedy and variation shall
be determined by the Minister on the recommendation of
the Bank.

Legal tender. 24.   (1)   Notes issued by the Bank shall, if such notes are
not defaced, be legal tender in Malaysia at their face value
for the payment of any amount.

  (2)   Coins issued by the Bank shall, if such coins have not
been tampered with, be legal tender in Malaysia at their
face value—

(a) for the payment of any amount in the case of
coins of the denomination exceeding one
ringgit;

(b) for the payment of an amount not exceeding ten
ringgit in the case of coins of the denomination
of fifty sen and one ringgit; and

(c) for the payment of an amount not exceeding two
ringgit in the case of coins of the denomination
of less than fifty sen.

17

  (3)   Notwithstanding subsections (1) and (2) the Bank
shall have power, on giving not less than three months’
notice in the Gazette of its intention to do so, to call in any
of its notes and coins on payment of the face value thereof;
and any such notes or coins with respect to which notice
has been given under this subsection shall, on the
expiration of the notice, cease to be legal tender.

Coins tampered with
or notes defaced.

25.   A coin shall be deemed to have been tampered with if
the coin has been impaired, diminished or lightened
otherwise than by fair wear and tear or has been defaced by
stamping, engraving or piercing, whether the coin shall or
shall not have been thereby diminished or lightened, and a
note shall be deemed to have been defaced if any word,
sign, symbol, drawing, caricature, or other thing
whatsoever, has been written, inscribed, or in any other
manner or by any other means whatsoever has been shown
on its surface, or if it is torn, marred, burnt, injured, spoilt
or otherwise howsoever mutilated.

Withdrawal of notes
and coins and their

disposal.

26.   (1)   The Bank may take all such steps as it may deem
appropriate to withdraw from circulation coins which are
worn or which have been tampered with, or note which are
defaced, or unfit for circulation, and may destroy, deal with
or otherwise dispose of the same in such manner as may be
directed in writing by the Governor or any Deputy
Governor or other officer of the Bank as may be authorised
in writing by either the Governor or any Deputy Governor.

  (2)   The provisions of subsection (1) as to destruction or
disposal of, or dealing with, notes and coins shall apply to
notes and coins which have been called in and will cease to
be, or have ceased to be, legal tender under section 24 (3).

Refund of lost or
imperfect notes or

coins.

27.   (1)   No person shall be entitled to recover from the
Bank the value of any lost, stolen or imperfect note or coin
or any coin that has been tampered with or any note which
is defaced.

  (2)   The circumstances in which, and the conditions and
limitations subject to which, the value of lost, stolen, or
imperfect notes or coins or coins that have been tampered
with or notes which are defaced may be refunded as an act
of grace shall be within the absolute discretion of the Bank.

Restriction on the use
of photographs,

drawing or design of
note or coin in

advertisements, etc.

27A.   Except with the permission of the Bank, no person
shall, in any size, scale or colour, use any photograph of or
any drawing or design resembling any note or coin or part
thereof, in any advertisement or on any merchandise or
products which that person manufactures, sells, circulates
or otherwise distributes.

18

PART IV

RESERVE OF EXTERNAL ASSETS

Reserve of external
assets.

28.   It shall be the duty of the Bank to maintain at all times
a reserve of external assets to meet its obligations under
this Act, consisting of all or any of the following:

(a) gold coin or bullion;

(b) notes, coin, bank balances and money at call in
such country or countries as may be approved
by the Minister on the recommendation of the
Board;

(c) Treasury bills of such government or
governments as may be approved by the
Minister on the recommendation of the Board of
a maturity not exceeding one year;

(d) bill of exchange bearing at least two good
signatures and drawn on and payable at such
place or places as may be approved by the
Minister on the recommendation of the Board
and having a maturity not exceeding three
months (exclusive of days of grace);

[sic]

(e) securities of, or guaranteed, by such government
or governments or international financial
institutions as may be approved by the Minister
on the recommendation of the Board;

(f) securities purchased under section 30 (1)(oo)(i);

(g) any readily available international drawing
facility as may be approved by the Minister on
the recommendation of the Board.

External reserves as
proportion of Bank’s

liabilities.
33/51.

29.   The aggregate value of the reserve of external assets
specified in section 28 shall not be less than such
percentage of the Bank’s notes and coins in circulation as
the Minister may by notice in the Gazette declare to
correspond to the minimum reserve of extrernal assets
which the Board of Commissioners of Currency, Malaya
and British Borneo, would have been required to maintain
against notes and coin issued by the Commissioners under
the Currency Ordinance 1951, including any amendments
thereto in force immediately prior to the coming into effect
of Part III:

[sic]

   Provided that the Yang di-Pertuan Agong may by order
published in the Gazette vary the percentage declared.

19

PART V

BUSINESS OF THE BANK

Authorized business
of Bank.

30.   (1)   The Bank may—

(a) issue and redeem notes and coin in accordance
with Part III;

w.e.f. 12-Jun-1967.

(b) issue demand drafts and other kinds of
remittances made payable at its own offices and
branches or at the offices of agencies or
correspondents;

(bb) (i)  issue, with the approval of the Minister,
securities other than securities issued under
subparagraph (bbb)(i) in its own name and the
issue, holding and sale of such securities shall
be subject to such terms and conditions as the
Bank may determine at the time of the issue of
such securities:

Act A1271.

   Provided that the total amount of securities so
issued shall not at any time exceed fifty per
centum of the amount of the General Reserve
Fund of the Bank;

(ii)  purchase, sell and redeem securities issued
by the Bank pursuant to paragraph (bb) (i);

(bbb) (i) issue securities in its own name for the
purpose of conducting monetary policy
operations and the issue, holding and sale of
such securities shall be subject to such terms
and conditions as the Bank may determine at
the time of the issue of such securities:

   Provided that the total amount of securities
so issued shall not at any time exceed the
amount of the Bank’s reserve of external
assets;

(ii) purchase, sell and redeem securities issued
by the Bank pursuant to subparagraph (bbb)
(i) for the purpose of conducting monetary
policy operations;

(c) purchase, accept on deposit and sell gold coin or
bullion;

(d) accept deposit of money in any currency;

(e) purchase, sell, discount and rediscount inland
bills of exchange and promissory notes arising
out of bona fide commercial transactions
bearing two or more good signatures and
maturing within twelve months or such period

20

as may be approved by the Minister on the
recommendation of the Board (exclusive of days
of grace) from the date of acquisition;

(f) purchase, sell, discount and rediscount inland
bills of exchange and promissory notes bearing
two or more good signatures drawn or issued for
the purpose of financing seasonal agricultural
operations or the marketing of primary produce
and maturing within twelve months or such
period as may be approved by the Minister on
the recommendation of the Board (exclusive of
days of grace) from the date of acquisition;

(ff) make advances for the purpose of assisting the
growing or marketing of primary produce, to—

(i) authorities formed under any written law in
Malaysia; and

(ii) co-operative societies engaged in farming,
agricultural, horticultural, pastoral, grazing
or fishing operations;

(fff) make advances to such public authorities and
corporations in which the Government or the
Bank has an interest, including an interest in
shares (as that expression is to be construed
under the Banking and Financial Institutions Act
1989), as the Minister may approve on the
recommendation of the Board:

   Provided that the total amount of advances so
made shall not at any time exceed two-and-one-
half times the total of the Bank’s paid-up capital
and General Reserve Fund;

(ffff) establish a Special Investment Fund to finance
specific projects, wholly or partly, in the public
sector and on such terms as may be approved by
the Minister on the recommendation of the
Board for the purpose of promoting economic
development from monies set aside from the
reserve held at the Central Bank by banking
institutions under section 37 (1) (c) and by other
financial institutions required by the Bank from
time to time to hold such reserve:

   Provided always that the total amount so set
aside for such Special Investment Fund shall be
approved by the Minister on the
recommendation of the Board and shall not
exceed the amount of the General Reserve Fund
of the Bank;

(fffff) allow for a temporary overdrawing by account
holders subject to the imposition of such rate of
interest on the overdraft as the Bank may deem

21

fit;

(g) purchase, sell, discount and rediscount Treasury
bills of the Government or of the Government of
any State authorized to issue Treasury bills;

(h) purchase and sell securities of the Government
or of the Government of any State, or of any
public authority maturing in not more than thirty
years which have been publicly offered for sale
or form part of an issue which is being made to
the public at the time of acquisition and any
other securities as may be approved by the
Minister on the recommendation of the Board;

(i) invest in securities of the Government or of the
Government of any State, or of any public
authority for any amount, and to mature at any
time, on behalf of staff and pension funds and
other internal funds of the Bank;

(j) with the approval of the Minister, acquire, hold
and sell shares of any corporation set up with
the approval of, or under the authority of, the
Government for the purpose of promoting the
development of a money market or securities
market in Malaysia or for the financing of
economic development in Malaysia:

   Provided that the total amount so invested
shall not at any time exceed fifty per centum of
the General Reserve Fund of the Bank;

(k) grant advances for fixed periods not exceeding
three months against Treasury bills of the
Government or of the Government of any State
authorized to issue Treasury Bills;

(l) grant advances for fixed periods not exceeding
twelve months or such period as may be
approved by the Minister on the
recommendation of the Board secured by the
pledge with the Bank of—

(i) gold coin or bullion;

(ii) securities of the Government or of the
Government of any State, or of any public
authority which have been publicly offered
for sale and are to mature within a period of
thirty years or any other securities as may be
approved by the Minister on the
recommendation of the Board:

   Provided that no such advance so secured
shall at any time exceed the market value of
the security pledge;

(iii) such bills of exchange and promissory notes

22

as are eligible for purchase, discount or
rediscount by the Bank;

(iv) warehouse warrants or their equivalent
(securing possession of goods), in respect of
staple commodities or other goods duly
insured and with a letter of hypothecation
from the owner:

   Provided that no such advance shall
exceed sixty per centum of the current
market value of the commodities or goods in
question;

(m) purchase and sell currencies, and purchase, sell,
discount and rediscount bills of exchange and
Treasury bills drawn in or on places outside
Malaysia and maturing within one year from the
date of acquisition;

(mm) borrow money, establish credits and provide
guarantees and indemnities in any currency,
within and without Malaysia on such terms and
conditions as it may deem fit;

(mmm) (i) establish a credit bureau to collect, in such
manner and to such extent as the Bank
thinks fit, credit information (including
information on and relating to the rejection
of any cheque by a paying bank by reason of
insufficiency of funds in the account of the
drawer of the cheque) on the customers of
any banking institutions or other financial
institutions; and

(ii) notwithstanding section 16, disclose, in such
manner and to such extent as the Bank
thinks fit, the credit information collected by
the credit bureau to—

(A) any banking institutions or other financial
institutions for the purpose of assisting in
assessing the creditworthiness of its
existing and potential customers or for the
purpose of assisting the banks to assess
the eligibility of the customer to maintain
or open a current account with the bank;
and

(B) the customer of the banking institutions
or other financial institutions in respect of
his own account for the purpose of
verifying the accuracy of the credit
information provided by the banking
institutions or other financial institutions:

   Provided that the information disclosed by
the Bank to the banking institutions and

23

other financial institutions shall be secret
between the Bank and the institutions unless
the banking institutions and other financial
institutions were requested by a customer to
disclose the information in respect of his
account:

   Provided further that no action, suit,
prosecution or other proceeding whatsoever
shall lie or be brought, instituted or
maintained in any court or before any other
authority against the Bank on account of or
in respect of any act done or statement made
or omitted to be done or made under this
provision if the act or statement was done or
made or omitted to be done or made in good
faith;

(mmmm) (Deleted).

(n) maintain accounts with central banks outside
Malaysia and with other banks within and
without Malaysia;

(nn) place deposits in any banking institution within
Malaysia;

(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
banking institution;

(o) purchase and sell securities of, or guaranteed by,
such government or governments or
international financial institutions as may be
approved by the Minister on the
recommendation of the Board;

(oo) (i) purchase and sell such other securities as
may be approved by the Minister on the
recommendation of the Board;

Act 472. (ii) pay to the International Monetary Fund the
subscriptions in respect of which the
Government is responsible under the Bretton
Woods Agreements Act 1957, as amended
from time to time, and take to the Bank’s
own account the payments of the aforesaid
subscriptions already made by the
Government;

(iii) pursuant to paragraph (oo) (ii), create and
issue to the International Monetary Fund in
such form as is appropriate any such non-
interest bearing and non-negotiable notes or
other obligations as the International
Monetary Fund may under section 4 of

24

Article III of the Articles of Agreement of
the International Monetary Fund determine
to accept in place of any part of the
subscription of the Government which
would but for such acceptance be payable in
Malaysian currency;

(iiia) draw from time to time on the compensatory
financing facility and other facilities of the
International Monetary Fund and upon the
request of the Government make available
to the Government funds arising from such
drawings, which funds the Government is
hereby authorised to receive;

(iv) draw from time to time on the buffer stock
financing facility of the International
Monetary Fund and make available to the
Government funds arising from such
drawing required for contribution to any
buffer stock created under any international
commodity agreement to which Malaysia is
a signatory; and in the case where such
drawing is not available or insufficient to
meet the requirement, make available to the
Government funds from the Bank’s own
resources;

(v) create and issue to the International
Monetary Fund in such form as is
appropriate any such non-negotiable notes
or obligations as may be acceptable to the
International Monetary Fund in respect of
any transactions with the International
Monetary Fund;

(vi) exchange, if requested by other members of
the International Monetary Fund at the time
of purchase, balances of Malaysian currency
purchased by other members from the
International Monetary Fund, or obtained by
other members in exchange for currency
purchased from the International Monetary
Fund, for a freely usable currency (defined
in Article XXX (f) of the Articles of
Agreement of the International Monetary
Fund) selected by the Bank at an exchange
rate between the ringgit and that currency as
may be consistent with section 7 (a) of
Article XIX of the Articles of Agreement of
the International Monetary Fund;

(p) act as correspondent, banker or agent for any
central bank or other monetary authority and for
any international bank or international monetary
authority established under governmental

25

auspices;

(q) open accounts for and accept deposits from the
Government, State Governments, public
authorities, banking institutions and other
financial institutions and, with the prior
approval of the Minister, other persons in
Malaysia;

(r) underwrite loans in which it may invest;

(s) undertake the issue and management of loans
publicly issued—

(i) by the Government;

(ii) by the Government of any State;

(iii) by any public authority; or

(iv) with the approval of the Minister, by any
corporation referred to in paragraph (j);

(t) (Repealed);

(tt) (Repealed);

(ttt) (Repealed);

(u) accept from customers for custody securities and
other articles of value;

(v) undertake on behalf of customers and
correspondents the purchase, sale, collection and
payment of securities, currencies and credit
instruments within and without Malaysia, and
the purchase or sale of gold and silver;

(w) establish bank Clearing Houses in Kuala
Lumpur and in such other places as the Bank
may consider necessary;

(ww) participate in schemes undertaken in
conjunction with Central Banks or authorities
outside Malaysia to promote regional and
international co-operation in economic and
financial research and training;

(www) with the approval of the Minister, participate on
its own behalf or as agent of the Government in
schemes undertaken in conjunction with Central
Banks or authorities outside Malaysia to
promote regional and international monetary
co–operation;

Act 372.
Act 276. (x) do generally all such things as may be

commonly done by bankers and are not
inconsistent with the exercise of its powers or
the discharge of its duties under this Act or
under the Banking and Financial Institutions Act
1989 or the Islamic Banking Act 1983.

26

  (1A)   Nothing in subsection (1) shall prevent the Bank, in
exercising any of its powers under that subsection, from
making such necessary adjustments as may be approved by
the Syariah Advisory Council whether or not such
adjustments involve a sale, a purchase, a sale and
repurchase, a lease, a sale and lease back, or any other
business or dealing involving assets or properties, which
would otherwise be prohibited by this Act:

   Provided that where any difficulty or doubt arises in the
application of subsection (1) in relation to any particular
banking institution or other financial institution, or any
particular matter or circumstance, or generally, the Minister
may on the reference of the difficulty or doubt to him by
the Bank, resolve the difficulty or doubt by a direction in
writing.

  (2)   The expression “primary produce” in subsection (1)
(f) and (ff) means such goods as the Minister may on the
recommendation of the Board prescribe:

   Provided that any advance under paragraph (ff) shall not
be made for more than one year.

Act 17.
Act 89.

Act 276.
Act 312.
Act 372.
Act 577.

  *(3)   It shall be the duty of the Bank to administer,
enforce, carry out and give effect to the provisions of the
Exchange Control Act 1953, the Insurance Act 1963, the
Islamic Banking Act 1983, the Takaful Act 1984, the
Banking and Financial Institutions Act 1989 and the
Money-Changing Act 1998,, and to exercise any other
function under any other written law in respect of which
provision is made by Federal law.

* Note.
Act A1010.
[sic]

  (4)   The Bank shall maintain at all times for such period
or periods as it may deem appropriate, a record of balance
of payments containing such information, statistics and
particulars as it may from time to time determine, for the
purpose of carrying out the principal objects of the Bank
under section 4 and discharging its duties and functions
under this Act.

  (5)   For the purpose of maintaining the record of balance
of payments, the Bank shall have the power to require in
writing at any time any person which, in the opinion of the
Bank, has in its possession or under its custody or control,
or has within its capacity to obtain, compile or submit, any
information, statistics or document relating to the record of
balance of payments—

(a) to submit such information, statistics or
document to the Bank, within such period, at
such intervals, in such manner, in such form and
in writing or by means of any visual recording
(whether of still or moving images) or any
sound recording, or any electronic, magnetic,
mechanical or other recording whatsoever, on
any substance, material, thing or article as the

27

Bank may specify in the requirement; or

(b) to attend before an officer of the Bank to answer
any enquiries in relation to such information,
statistics or document.

  (6)   Any—

(a) information, statistics or document submitted
pursuant to any requirement under paragraph
(a); or

(b) answer to any enquiry pursuant to any
requirement under paragraph (b),

of subsection (5), shall be true, correct and complete, and
shall not be designed, directly or indirectly, to mislead the
Bank in relation to such requirement.

  (7)   The Bank may publish in any manner it deems fit,
consolidated statements of all or any part of the record of
balance of payments, aggregating the information, statistics
or particulars in documents received or obtained under
subsection (5), provided that such publication shall not in
any manner lead to the identification of any person to
which such information, statistics or particulars relate.

  (8)   Notwithstanding section 16A or any other written
law, but without prejudice to subsection (7), any
information, statistics or document received or obtained by
the Bank under subsection (5) shall be used by the Bank for
the purposes of maintaining the record of balance of
payments, carrying out its principal objects under section 4
and discharging its duties and functions under this Act, and
shall not be disclosed by the Bank to any person other than
the Governor, Deputy Governors, or an officer or employee
of the Bank for all or any of the aforesaid purposes.

  (9)   For the purposes of giving effect to subsections (4),
(5) and (6), the Bank may make such regulations under
section 54 as it deems necessary or expedient.

*   Deemed to have been in force in relation to—

(a) the Exchange Control Act 1953 with effect from
28th July 1966;

(b) the Insurance Act 1963 and the Takaful Act
1984 with effect from 1st May 1988; and

(c) the Islamic Banking Act 1983 and the Banking
and Financial Institutions Act 1989,
respectively, with effect from their respective
dates of commencement.

(See s. 14 (3) of Act A737.)

Act A1328.

28

Establishment of
body corporate for
training, financial

counselling, payment
systems, etc.

30A.   (1)   Notwithstanding section 31, the Bank may—

(a) establish a body corporate for the purpose of
training, research and development of human
resource in relation to banking and financial
services;

(b) establish a body corporate for the purposes of
providing financial counselling, debt
management services and education on financial
management; and

(c) establish a body corporate or acquire, hold or
sell shares of a body corporate, wholly or partly,
to operate payment systems or issue payment
instruments, and undertake any other ancillary
or incidental function or activity, for the purpose
of promoting and developing payment systems
and payment instruments in Malaysia.

  (2)   The Bank may—

(a) grant, donate, loan or advance any sum of
money as may be necessary for the
establishment or operations of a body corporate
established under paragraph (1)(a) and (b) and
create and manage a fund to meet the expenses
of such body corporate; and

(b) grant, donate, loan or advance any sum of
money as may be necessary for the
establishment or operations of a body corporate
established or acquired under paragraph (1)(c).

  (3)   For the purpose of paragraph (2)(b), a body corporate
established or acquired under paragraph (1)(c) shall be
wholly owned by the Bank.

Business which Bank
may not transact.

31.   The Bank may not—

(a) engage in trade or otherwise have a direct
interest in any commercial, agricultural,
industrial or any other undertaking except—

(i) as provided in section 30 (1) (j); or

(ii) in the course of the satisfaction of debts due
to the Bank: provided that any such interest
shall be disposed of at the earliest suitable
opportunity;

(b) grant loans upon security of any shares;

(c) except as provided in section 30 (1) (j) and (oo)

29

(i), purchase the shares of any corporation,
including the shares of any banking institution
or other financial institution which is a
company;

(d) except as provided in sections 33, 42 and 49,
grant unsecured advances or advances secured
otherwise than as laid down in section 30 (1)
(ff), (fff), (ffff), (fffff), (k) and (l):

   Provided that in the event of any debt due to
the Bank becoming in the opinion of the Bank
endangered, the Bank may secure such debt on
any immovable or movable property of the
debtor and may acquire such property, which
shall, however, be resold at the earliest suitable
moment;

(e) purchase, acquire or lease immovable property
except in accordance with the proviso to
paragraph (d) and except so far as the Bank shall
consider necessary or expedient for the
provision, or future provision, of business
premises for the Bank and its agencies and any
Clearing Houses established pursuant to section
30 (1)(w) and of residences for the Governor,
Deputy Governors, officers and employees and
of amenities for the promotion of the welfare of
officers and employees:

   Provided that where any immovable property
purchased, acquired or leased by the Bank for
any of the said purposes, is not immediately
required for those purposes, or where any
immovable property referred to in the proviso to
paragraph (d) cannot be immediately resold, it
shall be lawful for the Bank to grant leases or
tenancies of such immovable property for such
period as the property is not required for the said
purposes or cannot be resold, as the case may
be;

(f) draw or accept bills payable otherwise than on
demand;

(g) allow the renewal or substitution of maturing
bills of exchange purchased, discounted or
rediscounted by or pledged with the Bank:

   Provided that in exceptional circumstances the
Bank may authorize one renewal or one
substitution only in either case of not more than
fifty per centum of the original amount of any
such bill for a period not exceeding ninety days;

(h) accept for discount, or as security for an
advance made by the Bank, bills or notes signed
by members of the Board or by the Bank’s

30

officers or employees, except in relation to any
loan made by the Bank under section 49.

Loans to, and
acquisition of,

banking and other
financial institutions.

Act 372.

31A.   (1)   Notwithstanding section 31, where the Bank
considers that a licensed institution, or an institution in
respect of which an order has been made by the Minister
under section 24 (1) or 93 (1) of the Banking and Financial
Institutions Act 1989 is—

(i) likely to become unable to meet its obligations;
or

(ii) about to suspend payment,

the Bank may, with the concurrence of the Minister—

(a) grant loans to such institution against the
security of its own or any shares or any other
sufficient security;

(b) grant loans to any licensed institution to
purchase any shares or the whole or any part of
the properties and liabilities of such institution;
or

(c) purchase any shares of such institution for the
purpose of controlling the business of such
institution.

Act 372.   (2)   For the purposes of this section, section 31B, section
78 of the Banking and Financial Institutions Act 1989,
there shall be established an Advisory Panel to advise the
Minister on matters falling within the purview of those
provisions for which the concurrence or consent of the
Minister is required.

  (3)   The Advisory Panel shall consist of such persons as
may be appointed by the Minister on the recommendation
of the Bank.

  (4)   The persons appointed under subsection (3) shall be
paid by the Bank such remuneration and allowances as may
be specified in writing by the Minister.

Power of Bank to
make an order in

respect of a deposit-
taker to protect the

interests of its
depositors, etc.

*31B.   (1)   The Bank may, with the concurrence of the
Minister, if it is satisfied that—

* Note

(a) a deposit-taker—

(i) has become, or is likely to become, unable
to meet all or any of its obligations; or

(ii) is about to suspend, or has suspended,
payment to any extent; and

31

(b) it is consequently necessary to take action under
this section for the purpose of—

(i) securing or maintaining the financial
stability of Malaysia; and

(ii) the protection of the interests of depositors
in the deposit-taker,

by order published in the Gazette, make all or any of the
following provisions:

(aa) provide for the Bank—

(i) to purchase any shares of a licensed finance
company;

(ii) to make an advance of its funds to a licensed
finance company, repayable with or without
interest, for the purpose of being utilised by
the licensed finance company solely to
acquire the property and liabilities of the
deposit-taker, or the interests of the
depositors in the deposit-taker; or

(iii) to make an advance of its funds to a bank
incorporated in Malaysia, repayable with or
without interest, to be utilised by the bank
solely to acquire a licensed finance company
which, thereafter, shall acquire the property
and liabilities of the deposit-taker or the
interests of the depositors in the deposit-
taker; and

(bb) provide for the depositors, in exchange for their
interest in the deposit-taker, to be given shares
in the licensed finance company referred to in
subparagraph (i), (ii), or (iii), as the case may
be, of paragraph (aa).

  (2)   An order under subsection (1) shall not be made by
the Bank unless—

(a) the consent of the deposit-taker has been
obtained;

(b) the available unencumbered assets of the
deposit-taker are insufficient to meet its deposit-
liabilities; and

(c) the consents of the depositors have been
obtained, except where, on the application of the
Bank to the High Court by way of ex parte
originating summons, it is ordered by the High
Court that such consents be dispensed with:

   Provided that the above provisions shall not apply to any
amendment or revocation of the original order made under
subsection (1).

[sic]

32

  (3)   Where the Bank makes an order under subsection (1),
order shall constitute sufficient authority for the Bank or
any other person named or described in the order to do all
or any of the acts or things as may be required or
authorised to be done by the Bank or such person under the
terms of the order, and to do all other acts and things as
may be reasonably incidental to, or reasonably necessary to
be done, to give effect to such terms.

  (4)   For the purpose only of giving effect to the terms of
an order under subsection (1), the Bank may authorise the
licensed finance company referred to in the order by virtue
of subparagraph (i), (ii) or (iii), as the case may be, of
subsection (1) (aa), to—

(a) undertake a reconstruction exercise;

(b) purchase and acquire the property and liabilities
of the deposit-taker and the interests of the
depositors in the deposit-taker;

(c) enter into such arrangement, agreement or
transaction with the deposit-taker or its
depositors as may be necessary, expedient or
desirable; or

(d) do any other act or thing which is not
inconsistent with the order, which, in the
opinion of the Bank, is required to be done to
ensure the successful implementation of the
order.

  (5)   An order under subsection (1) may provide for all or
any of the following:

(a) the date on and from which the order shall take
effect, being a date earlier or later than the date
of the making of the order (hereinafter in this
section referred to as “the transfer date”);

(b) the vesting of any property held by the
transferor either alone or jointly with any other
person in the transferee either alone or, as the
case may be, jointly with such other person, on
and from the transfer date, in the same capacity,
upon the trusts, and with and subject to the
powers, provisions and liabilities applicable
thereto respectively;

(c) for any existing instrument, whether in the form
of a deed, will or otherwise, or order of any
court, under or by virtue of which any property
became vested in the transferor, to be construed
and to have effect as if for any reference therein
to the transferor there were substituted a
reference to the transferee;

(d) for any existing contract or agreement to which
the transferor was a party to have effect as if the

33

transferee had been a party thereto instead of the
transferor;

(e) for any account between the transferor and its
customer, including a depositor, to become an
account between the transferee and the customer
or depositor, subject to the conditions and
incidents as theretofore, and for such accounts to
be deemed for all purposes to be a single
continuing account;

[sic]

(f) for any existing instruction, order, direction,
mandate, power of attorney, authority,
undertaking or consent, whether or not in
relation to an account, given to the transferor,
either alone or jointly with another person, to
have effect, in respect of anything due to be
done as if given to the transferee either alone or,
as the case may be, jointly with the other person;

(g) for any negotiable instrument or order for
payment of money drawn on, or given to, or
accepted or endorsed by, the transferor or
payable at the place of business of the
transferor, whether so drawn, given, accepted or
endorsed before, on, or after, the transfer date, to
have the same effect on and from the transfer
date, as if it had been drawn on, or given to, or
accepted or endorsed by, the transferee or were
payable at the place of business of the
transferee;

(h) for the custody of any document, goods or thing
held by the transferor as bailee immediately
before the transfer date to pass to the transferee
and the rights and obligations of the transferor
under any contract of bailment relating to any
such document, goods or thing to be transferred
to the transferee;

(i) for any security held immediately before the
transfer date by the transferor, or by a nominee
of, or trustee for, the transferor, as security for
the payment or discharge of any liability of any
persons to be held by the transferee or, as the
case may be, to be held by that nominee or
trustee as the nominee of, or trustee for, the
transferee, and to the extent of those liabilities,
be available to the transferee as security for the
payment or discharge of those liabilities; and
where any such security extends to future
advances or future liabilities, to be held by, and
to be available as aforesaid to, the transferee as
security for future advances by, and future
liabilities to, the transferee in the same manner
in all respects as future advances by, or future

34

liabilities to, the transferor were secured thereby
immediately before the transfer date;

(j) where any right or liability of the transferor is
transferred to the transferee, for the transferee to
have the same rights, powers and remedies (and
in particular the same rights and powers as to
taking or resisting legal proceedings or making
or resisting applications to any authority) for
ascertaining, protecting or enforcing that right or
resisting that liability as if it had at all times
been a right or liability of the transferee,
including those rights or liabilities in respect of
any legal proceedings or applications to any
authority pending immediately before the
transfer date by or against the transferor;

(k) any judgement or award obtained by or against
the transferor and not fully satisfied before the
transfer date to be enforceable by or, as the case
may be, against the transferee; and

(l) for all and every such incidental, consequential
and supplemental matters as are necessary,
expedient, or desirable, to give full force end
effect to the terms of the order.

  (6)   Where the order under subsection (1) provides for the
transfer of any property vested in or held by, or any
liabilities suffered by, the transferor, either alone or jointly
with any other person, then, by virtue of the order, that
property and those liabilities shall, subject to subsection
(8), on and from the transfer date, become vested in or held
by, or be sufferred by, the transferee, either alone or jointly
with such other person, as the case may be.

  (7)   The Bank shall, within thirty days of the publication
of an order in the Gazette under subsection (1), lodge a
copy of the order with—

(a) the Registrar of Companies;

(b) the Registrar General of Co-operative Societies
in West Malaysia, or the respective Registrar of
Co-operative Societies in Sabah or Sarawak, or
the Registrar of Farmers’ Organizations, or the
Registrar of Fishermen’s Associations, as may
be relevant, where the deposit-taker to which the
order relates is a co-operative society;

(c) any other authority, person, or body which is
responsible for the registration, licensing or
otherwise of the deposit-taker to which the order
relates; and

(d) the appropriate authority, if any, concerned with
the registration or recording of dealings in any
movable property, or interest in any movable

35

property, transferred pursuant to the order.

  (8)   Any provision in any order under subsection (1)
providing for the transfer of any alienated land, or any
share or interest in any alienated land, to any person shall
not have effect unless the transferee makes an application
to the High Court by way of an ex parte originating
summons for an order of the High Court vesting such
alienated land, or such share or interest in alienated land, in
the transferee, pursuant to the order under subsection (1),
and where the High Court grants an order to vest the same
in the transferee—

Act 56/65. (a) the High Court shall, where the alienated land is
in West Malaysia, pursuant to section 420 (2) of
the National Land Code, cause a copy of such
order to be served on the Registrar of Titles or
the Land Administrator, as the case may be,
immediately after the making of such order so
that the Registrar of Titles or the Land
Administrator, as the case may be, gives effect
to subsections (2), (3) and (4) of the said section
420;

Sabah Cap. 68. (b) where the alienated land is in Sabah, the
transferee shall, as soon as practicable after such
order has been made, present such order to the
Registrar of Titles for registration of the
transferee as the registered owner of such
alienated land, or of such share or interest in
alienated land, as provided under section 114 (2)
of the Land Ordinance of Sabah; or

Swk. Cap. 81. (c) where the alienated land is in Sarawak, the
transferee shall, as soon as practicable after such
order has been made, produce an authenticated
copy of such order to the Registrar for the
registration of the vesting of such alienated land,
or of such share or interest in alienated land, in
the transferee, as provided under section 171 of
the Land Code of Sarawak.

  (9)   An order under subsection (1) may relate to any
property or business of the transferor in any country,
territory or place outside Malaysia and, if it so relates,
effect may be given to it in accordance with the law
applicable in such country, territory or place.

  (10)   Without prejudice to subsection (2) (a) and (c), an
order under subsection (1) shall be legally binding on all
persons to whom the order is directed or who are affected
thereby, regardless that the person to whom it is directed or
who is affected by it had no notice of any of the
circumstances which led to the making of the order, or had
no opportunity to make any representation thereon to, or to
be heard thereon by, the Bank.

36

  (11)   Where, pursuant to subsection (1) (aa) (i), the Bank
purchases any shares of a licensed finance company, it
shall dispose of any shares it may continue to hold after the
order under subsection (1) under which such shares were
purchased has been given effect to, and the Bank is
satisfied that the circumstances referred to in subsection (1)
(a), and the purposes mentioned in paragraph (b) of that
subsection, no longer exist.

  (12)   For the purposes of this section—
Act 372. (a) “deposit”, “depositor”, “liabilities”, “licensed

finance company”, and “property” have the
respective meaning assigned thereto in section 2
(1) of the Banking and Financial Institutions Act
1989, with the definition of “deposit” modified
in the manner provided under section 25 (3) of
that Act;

Act 372. (b) “business” and “security” have the respective
meaning assigned thereto in section 50 (8) of the
Banking and Financial Institutions Act 1989;
and

Act 372. (c) “deposit-taker” means (without prejudice to
paragraphs (i) and (ii) of this definition) any
person who takes, receives, or accepts, a deposit
in contravention of section 25 of the Banking
and Financial Institutions Act 1989 and
includes—

(i) a co-operative society as defined in that Act;
or

Act 81. (ii) a pawnbroker as defined in the Pawnbrokers
Act 1972.

  (13)   This section shall have full force and effect
notwithstanding—

(a) anything inconsistent therewith or contrary
thereto contained in any other provision of this
Act;

(b) anything contained in the written law by or
under which the deposit-taker is registered,
incorporated, established, appointed or
constituted; and

(c) anything contained in any other written law,
other than the Constitution.

* The substitution of this section by section 17 (1) of
the Central Bank of Malaysia, Exchange Control,
Insurance and Takaful (Amendment) Act 1989 (Act
A 737) shall not in any manner or to any extent
whatsoever affect the continued validity and

37

operation of any order made by the Bank under this
section as it stood before its substitution and such
order shall, after the commencement of aforesaid Act,
be deemed to have been made under this section as
set out under section 17 (1) of aforesaid Act and shall,
accordingly, be given effect to thereunder, and any
difficulty arising in this connection may be removed
by the Bank making an amendment of that order with
the concurrence of the Minister.

Act A737. See s. 17 (2) of Act A 737.

Power to reduce
share capital and to

cancel shares of
financial institution.

Act 372.

31C.   (1)   Notwithstanding anything in any written law or
the articles of association of a financial institution, where
the Bank has, under section 73 (2) (a) of the Banking and
Financial Institution Act 1989 assumed control of and
carries on the business of the financial institution and the
paid up capital of such financial institution is lost or
unrepresented by available assets, the Bank may apply to
the High Court for an order to reduce the share capital of
such financial institution by cancelling any portion of its
paid up capital which is lost or unrepresented by available
assets.

  (2)   Where the High Court makes an order referred to in
subsection (1) to reduce the share capital of a financial
institution, the Court may—

(a) on the application by the Bank; and

(b) if, on the expiry of thirty days from the date of
any call made by the financial institution on its
shareholders to pay on their respective shares,
payment on any such shares has not been made,

direct that such shares for which payment has not been
made be cancelled accordingly.

  (3)   Where the share capital of a financial institution is
reduced pursuant to subsection (1), or any of its shares has
been cancelled pursuant to subsection (2), the Bank may
cause the memorandum of association of such financial
institution to be altered accordingly.

  (4)   For the purposes of this section—
Act 125. (a) section 64 of the Companies Act 1965 shall,

subject to subsection (1) and if the High Court
so directs, apply accordingly; and

Act 372. (b) “financial institution” means an Islamic bank, a
licensed local institution as defined in the
Banking and Financial Institutions Act 1989, or
an institution in respect of which the Minister
has made an order under section 24 (1) or 93 (1)
of that Act, respectively.

38

PART VI

RELATIONS WITH THE GOVERNMENT

Bank as a banker to
the Government.

32.   (1)   The Bank shall act as a banker and a financial
agent of the Government.

  (2)   Whenever the Bank shall receive and disburse
Government moneys it shall keep account thereof without
remuneration for such service.

  (3)   In any place where the Bank has no branch, it may
appoint any banking institution to act as its agent for the
collection and payment of Government moneys.

  (4)   The Bank may act generally as agent for the
Government on such terms and conditions as may be
agreed between the Bank and the Government, where the
Bank can do so appropriately and consistently with the
provisions of this Act and with its duties and functions as a
central bank.

Temporary advances
to the Government.

33.   (1)   The Bank may grant temporary advances to the
Government and the Government is hereby authorised to
receive such advances in respect of temporary deficiencies
of budget revenue at such rate or rates of interest as the
Bank may determine.

  (2)   The total amount of advances granted under
subsection (1) outstanding shall not at any time exceed
twelve and a half per centum of the estimated receipts of
Malaysia shown in the statement laid before the House of
Representatives pursuant to Article 99 of the Constitution
for the Government’s financial year in which the advances
are granted.

  (3)   All advances granted under subsection (1) shall be
repaid as soon as possible and shall in any event be payable
not more than three months after the end of the
Government’s financial year in which they are granted; and
if after that date any such advances remain unrepaid, the
power of the Bank to grant further such advances in any
subsequent financial year shall not be exercisable unless
and until the outstanding advances have been repaid.

34.   (1)   The Board shall keep the Minister informed of—

(a) the monetary and banking policy;
Act 89.

Act 276.
Act 312.
Act 372.
Act 577.

(b) the policies in respect of institutions in relation
to which the Bank is conferred with powers
under the Insurance Act 1963, the Islamic

Act A1010.

39

Banking Act 1983, the Takaful Act 1984, the
Banking and Financial Institutions Act 1989 and
the Money- Changing Act 1998; and

Act 17. (c) the policies in respect of the Exchange Control
Act 1953,

pursued or intended to be pursued by the Bank.

  (2)   The Minister may, from time to time, if he disagrees
with the Board on any of the aforesaid policies pursued or
intended to be pursued by the Bank, issue directives to the
Board relating to such policies, and any such directive shall
become binding on the Board, which shall forthwith take
all steps necessary or expedient to give effect thereto.

  (3)   If the Board objects to any such directive, the Board
may submit its objections and the reasons therefor in
writing to the Minister, who shall cause the same, together
with his directive, to be laid before the House of
Representatives.

PART VII

RELATIONS WITH BANKING AND OTHER
FINANCIAL INSTITUTIONS

Co-operation with
banking institutions
and other financial

institutions.

35.   The Bank shall use its best endeavours in co-operation
with other banks in Malaysia—

Note.

(a) to promote and maintain banking and financial
services for the public;

(b) to foster higher standards of banking and
finance in Malaysia.

36.   (Repealed).

Recommendations to
banking institutions,

other financial
institutions or

institutions or persons
as specified in

paragraphs (a), (b),
(c), (d) and (e).

37.   (1)   When the Board is satisfied that it is necessary to
do so for the purpose of giving effect to the objects of the
Bank, the Board may make recommendations to the
banking institutions, other financial institutions or
institutions or persons as specified in paragraphs (a), (b),
(c), (d) and (e) on all or any of the following matters:

(a) the policy to be followed by banking institutions
in relation to the granting of advances and the
extension of credit facilities, including the
classes of purposes for which advances may or
may not be made or credit facilities extended;

40

(b) in the case of banking institutions other than
Islamic banks, the rates of interest payable to or
by, the rates of discount chargeable by, or the
rates of commission and other charges payable
to, such banking institutions;

(c) a reserve to be held by each banking institution,
other than an Islamic bank, at the Central Bank
comprising such amounts expressed as a
percentage of such banking institution’s sight,
savings account, time and other deposit
liabilities in Malaysia and such other liabilities
as may be approved by the Minister on the
recommendation of the Board, whether
denominated in Malaysian or foreign currency;

(d) a reserve to be held by each Islamic bank at the
Central Bank comprising such amounts
expressed as a percentage of each bank’s sight,
savings account, investment account, time and
other deposit liabilities as may be approved by
the Minister on the recommendation of the
Board, whether denominated in Malaysian or
foreign currency;

(e) any other matter relating to—
Act 276.
Act 372. (i) the supervision and regulation of banking

institutions and other financial institutions
pursuant to this Act, the Islamic Banking
Act 1983 or the Banking and Financial
Institutions Act 1989;

Act 89.
Act 312.
Act 577.

(ii) the supervision and regulation of institutions
and other persons pursuant to the Insurance
Act 1963, the Takaful Act 1984 or the
Money-Changing Act 1998; or

(iii) monetary policy to be given effect to by
banking institutions, other financial
institutions or other institutions or persons,

whether or not such matter is similar to those specified in
paragraphs (a), (b), (c) and (d).

  (2)   The recommendations made in pursuance of
subsection (1) (c) or (d) may specify different ratios of
reserves for different categories of banking institutions.
The Board may determine the categories by reference to the
size or location of such banking institutions or to both, size
being measured in relation to the number of branches, any
or all categories of assets or liabilities of such banking
institution or any combination thereof.

  (3)   In respect of subsection (1) (a) the Board may, in
regard to the advances of such banking institution or each
class of purpose for which these advances are made,
specify that a deposit or deposits be placed by such banking

41

institution with the Central Bank against such advances at
such rates of interest payable to such banking institution as
may be determined by the Central Bank.

  (4)   Where a banking institution is unable to comply with
any recommendation of the Board under paragraph (1)(a)
(in this subsection referred to as the “defaulting banking
institution”) and any such recommendation requires the
banking institution to grant advances or extend credit
facilities of such proportion or amount of its advances or
credit facilities for any particular purpose as set out in the
recommendation, the Board may require the banking
institution to place a sum on deposit with the Central Bank
equivalent to such proportion of advances or credit
facilities, free of interest, for such period and on such terms
as may be determined by the Central Bank.

Act A1213.

  (5)   The Central Bank shall have the power to transfer the
sums deposited with it by the defaulting banking institution
referred to in subsection (4) to another banking institution
for such banking institution to grant advances or extend
credit facilities for the purpose set out in the
recommendation made under paragraph (1)(a) for such
period and on such terms as may be determined by the
Central Bank.

  (6)   The Central Bank shall refund to the defaulting
banking institution referred to in subsection (4) the deposits
placed with it, free of interest, after the expiry of the period
determined by the Central Bank under subsection (4).

Recommendations to
persons or classes of

persons (other than
banking institution).

38.   When the Board is satisfied that it is necessary to do
so for the purpose of giving effect to the objects of the
Bank, the Board may make recommendations to such
persons or classes of persons (other than banking
institution) carrying on business in relation to the receipt of
money on deposit from members of the public as may be
determined by the Minister on the recommendation of the
Board in relation to the rates of interest payable to or by, or
the rates of discount chargeable by, such persons or classes
of persons.

Directions to banking
institutions, etc.

39.   (1)   When the Board has made a recommendation in
accordance with section 37 or 38, the Bank may
subsequently, with the approval of the Minister, issue a
direction in writing to any institution or person referred to
in section 37 or any person or class of persons referred to in
section 38 on all or any of the matters referred to in such
section requiring that effect is given to the recommendation
within a reasonable time.

  (2)   The direction issued under subsection (1) in relation
to a reserve to be held by a banking institution at the Bank
may specify different ratios of the reserve for different

42

categories of banking institutions. The Bank may determine
the categories by reference to the size or location of the
banking institutions or to both, size being measured in
relation to the number of branches, any or all categories of
assets or liabilities of the banking institution or any
combination thereof.

Saving in respect of
sections 37 to 39.

40.   Nothing in sections 37 to 39—

(a) authorizes a recommendation or a prescription
to be made or a direction to be given in relation
to an advance made or proposed to be made or
the extension of credit facilities to a particular
person or the rate of interest or rate of discount
chargeable to a particular person;

(b) affects the validity of a transaction entered into
in relation to an advance or credit facility or
affects the right of any institution or person
referred to in section 37 or 38 to recover money
advanced or enforce the security given in
respect of money advanced.

No discrimination in
directions.

Act 372.

41.   The Bank shall not discriminate among licensed
banks, licensed merchant banks, or licensed finance
companies, (as defined in the Banking and Financial
Institutions Act 1989), respectively, or among Islamic
banks, in any directions issued under section 39 in regard
to the policy to be followed by such banking institutions in
granting advances or extending credit facilities or, in the
case of banking institutions other than Islamic banks, the
rates of interest payable to or by such banking institutions,
or the rates of discount chargeable by such banking
institutions:

   Provided that the Bank may provide in such directions for
different classes, categories or descriptions of licensed
banks, licensed merchant banks or licensed finance
companies, respectively, such different proportions of their
deposits as the Bank may specify which may be used for
granting advances or extending credit facilities in such
different proportions for such different purposes as the
Bank may specify, and the Bank may determine such
classes, categories or descriptions by reference to the size
or location of the banking institution or to both, size being
measured in relation to the number of branches, any or all
categories of assets and liabilities, of the banking
institution, or any combination thereof.

Special loans to
banking and other

financial institutions.

42.   The Central Bank may, if it deems such action
necessary to safeguard monetary stability, make a loan or

Act A1213.

43

advance to any banking institution or other financial
institution, or enter into any transaction for such purposes
with any such institutions, which does not involve any
element which is not approved by the Syariah, in
accordance with the advice of the Syariah Advisory
Council, against such form of security as the Central Bank
may consider sufficient.

Clearing Houses and
settlement of

balances between
banking and other

financial institutions.

43.   (1)   In order to facilitate the clearing of cheques and
other credit or payment instruments for banking
institutions, other financial institutions or any person
approved by the Bank, the Bank or body corporate
established or acquired under subsection 30A(1) may, at an
appropriate time and in conjunction with such institutions
or person, establish a Clearing House in Kuala Lumpur and
in such other place or places as the Bank or body corporate
may consider necessary.

Act A1328.

  (2)   A banking institution, other financial institution or
any person approved by the Bank shall settle, in such
manner as the Bank or a body corporate established or
acquired under subsection 30A(1) may from time to time
specify by notice in writing, all balances between itself and
any other banking institution, other financial institution or
any person approved by the Bank arising out of the general
clearances effected in Kuala Lumpur and such other places
as the Bank or a body corporate establish or acquired under
subsection 30A(1) may specify.

44.   (Repealed).

PART VIII

GENERAL

Interpretation 44A.   For the purposes of this Part—

“central depository” means the system for the handling of
debt securities established or operated by the Bank
pursuant to paragraph 44B(1)(d);

“controller” has the meaning assigned thereto in the
Banking and Financial Institutions Act 1989;

“debt securities” includes—

(a) stock issued under the Loan (Local) Ordinance
1959 [Ord. 43/1959];

(b) Treasury Bills issued under the Treasury Bills
(Local) Act 1946 [Act 188];

(c) investments under the Government Investment

44

Act 1983 [Act 275];

(d) securities issued by the Bank under paragraphs
30(1)(bb) and 30(1)(bbb);

Act A1271.

(e) debentures, as defined in the Companies Act
1965, denominated and payable in ringgit issued
by the Government of any State, any public
authority, any statutory body, any corporation
including a private or a public company, or such
other persons who under their constituent
documents may issue such debentures that are
tendered, deposited, cleared or settled through
any system established or operated by the Bank
pursuant to subsection 44B(1); and

(f) such securities or debentures as may be
approved by the Minister on the
recommendation of the Board that are tendered,
deposited, cleared or settled through any system
established or operated by the Bank pursuant to
subsection 44B(1).

Bank may establish
systems for funds,

debt securities, etc.

44B.   (1)   The Bank may establish or operate such
systems, electronic or otherwise, as may be necessary—

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(a) to facilitate the transferring, clearing and
settlement of funds and debt securities in the
money market;

(b) to facilitate the tendering, issuance, borrowing
and lending of debt securities;

(c) to provide information to any person relating to
the money market or to the tender, issue, trading
and offer, or bid prices of debt securities or any
other related information relating to debt
securities;

(d) for the central handling of debt securities
deposited with the Bank by means of entries in
debt securities accounts without physical
delivery of certificates;

(e) for the carrying out of any other activity related
to any of the systems in paragraphs (a) to (d);
and

(f) for the dissemination of information relating to
paragraphs (a) to (e).

  (2)   The Bank may function as a depository or paying
agent or undertake any other ancillary or incidental
function related to the establishment or operation of any of
the systems referred to in subsection (1).

  (3)   The Bank may, with the approval of the Minister,

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make such regulations as may be necessary for the
regulation and efficient operation of any system established
or operated pursuant to subsection (1), including
regulations—

(a) to ensure orderly dealings in debt securities
through the system;

(b) to impose obligations and duties on participants
of any system established or operated pursuant
to subsection (1);

(c) in relation to the transfer, clearance and
settlement of funds and debt securities;

(d) in relation to the tendering, trading, borrowing,
lending and dissemination of information of
debt securities;

(e) in relation to the deposit, holding, transfer and
withdrawal of debt securities in or from the
central depository; and

(f) in relation to the suspension or withdrawal of
the services of the central depository.

Bank may require
information relating

to debt securities

44C.   (1)   The Bank may, for the purposes of section 44B,
by notice in writing, require any person to submit—

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(a) any information relating to any debt securities
tendered, traded, acquired, or held directly or
indirectly either for his own benefit or for any
other person;

(b) a statement of his current holding of debt
securities and whether he holds such securities
as a beneficial owner or as a trustee; or

(c) if he holds any debt securities deposited with the
central depository as a trustee, information as to
the identification of the persons for whom he
holds such debt securities by name and by any
other particulars sufficient to enable those
persons to be identified and to ascertain the
nature of their interest in such debt securities.

  (2)   Any person who has been served with a notice under
subsection (1) shall, within seven days of the receipt of
such notice or such longer period as may be allowed by the
Bank, submit to the Bank information required by the Bank
and duly verified by a statutory declaration.

Bank may prohibit
certain activities

44D.   (1)   The Bank may, by notice in writing, prohibit
any person from trading, borrowing, lending, clearing,
settling, redeeming, dealing or engaging in other activities
relating to debt securities deposited in the central

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depository if it is not satisfied as to the identity of—

(a) such person;

(b) any person for whom the person referred to in
paragraph (a) holds such debt securities; or

(c) the controllers of the person referred to in
paragraphs (a) and (b), where such person is an
institution.

  (2)   Any person who has been served with a notice under
subsection (1) shall cease to engage in the prohibited
activity upon receipt of the notice.

  (3)   Any person who has been prohibited from engaging
in any activity pursuant to a notice under subsection (1)
may make representations to the Bank and the Bank may,
upon review of his or its representations, revoke or vary the
prohibition subject to such terms and conditions as may be
imposed by the Bank.

  (4)   In this section, “controller” has the meaning assigned
thereto in the Banking and Financial Institutions Act 1989.

Bank’s financial year. 45.   The financial year of the Bank shall begin on the first
day of January and end on the thirty-first day of December
of each year.

Audit. 46.   The accounts of the Bank shall be audited by the
Auditor General.

Return of assets and
liabilities.

47.   (1)   The Bank shall forthwith after the fifteenth day
and after the last day of each month make up and publish a
return of its assets and liabilities as at the close of business
on such days respectively or, if either of those days is a
holiday, then at the close of business on the last business
day preceding those days.

  (2)   A copy of each return made under subsection (1)
shall be transmitted to the Minister.

Preparation and
publication of annual

report and balance
sheet.

48.   (1)   The Bank shall within three months from the
close of its financial year—

(a) transmit to the Minister a copy of the annual
accounts certified by the Auditor General, and
such accounts shall then be published in the
Gazette;

(b) transmit to the Minister a report by the Board on
the working of the Bank throughout the year and

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such report shall be published by the Bank.

  (2)   The annual accounts and annual report shall, as soon
as may be, be laid before the Senate and the House of
Representatives.

Loans and
scholarships to

officers and
employees, and

scholarships and
study loans to other

persons.

49.   (1)   Without prejudice to section 15 (5) and (6), but
subject to subsections (2), (3) and (4) of this section the
Bank shall not lend money to an officer or employee.

  (2)   The Bank may lend money with or without interest or
provide finance in accordance with Syariah principles to an
officer or employee—

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(a) for the purchase, erection, alteration, renovation
or enlargement of a house in which he resides or
intends to reside; or

(b) to discharge a mortgage or encumbrance on
such a house; or

(c) for the purchase of a vehicle.

  (3)   The Bank may, where the Governor is satisfied that
special or compassionate circumstances exist or the
purpose is appropriate, lend to an officer or employee on
such terms and conditions as the Governor thinks fit,
money not exceeding at any one time an amount equal to
three months’ salary of the officer or employee.

  (4)   The Bank may grant study loans or scholarships to
any officer or employee of the Bank or any child (including
a step-child or adopted child) of such officer or employee,
or to any suitable person, in accordance with such terms
and conditions as may be approved by the Board generally
or in any particular case.

Power to appoint
Attorney.

49A.   The Bank may, by instrument, under its seal, appoint
a person (whether in Malaysia or in a place outside
Malaysia) to be its Attorney, and the person so appointed
may, subject to the instrument, do any act or execute any
power or function which he is authorized by the instrument
to do or execute.

50.   (Repealed).

Penalties. 51.   (1)   Any banking institution or other financial
institution which—

(a)-(b) (Repealed).

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(c) fails to comply with section 43 (2),

shall, on conviction, be liable to a fine not exceeding one
thousand ringgit for every day during which such default or
contravention continues.

Note.

  (2)   (Omitted).

  (3)   Any institution or person referred to in section 37
which, or any person who, fails to comply with any
direction issued under section 39 other than in relation to a
reserve to be held by the bank shall, on conviction, be
liable to a fine not exceeding five hundred thousand ringgit,
and to a further fine not exceeding five thousand ringgit for
every day during which the default continues.

  (4)   (a)   Any banking institution which, or any person
who, fails to comply with any direction issued under
section 39 in relation to a reserve to be held by the banking
institution shall be liable to pay, on being called upon to do
so by the Central Bank, a penalty of not more than one-
tenth of one per centum of the amount of the deficiency for
every day during which the deficiency continues.

(b) Any banking institution which, or any person
who, fails or refuses to pay a penalty under
paragraph (a) shall, on conviction, be liable to a
fine not exceeding five hundred thousand
ringgit.

  (5)   Any person who contravenes section 16 shall, on
conviction, be liable to imprisonment for a term not
exceeding three years or to a fine not exceeding five
thousand ringgit or to both.

  (5A)   Any director, officer or employee of the Bank or of
a banking institution or other financial institution who
contravenes section 30(1)(mmm) in respect of maintaining
as secret any credit information disclosed by the Bank
shall, on conviction, be liable to imprisonment for a term
not exceeding three years or to a fine not exceeding five
thousand ringgit or to both.

  (6)   Any person who contravenes section 27A shall be
guilty of an offence and shall on conviction be liable to a
fine not exceeding five thousand ringgit.

  (7)   Any person who fails to comply with any
requirement of the Bank under section 30 (5) or who
contravenes section 30 (6) shall be guilty of an offence and
shall, on conviction, be liable to a fine not exceeding fifty
thousand ringgit or to imprisonment for a term not
exceeding six months or to both.

  (8)   Any person who contravenes any written directive
issued under subsection 16B(7) shall be guilty of an offence
and shall, on conviction, be liable to a fine not exceeding
five hundred thousand ringgit, and to a further fine not
exceeding five thousand ringgit for every day during which

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the contravention continues.

  (9)   Any person who does what he is prohibited or
restricted from doing or fails to do what he is required or
directed to do by regulations made by the Bank under
subsection 44B(3) shall be guilty of an offence and shall,
on conviction, be liable to a fine not exceeding five million
ringgit.

  (10)   Any person who fails to comply with the notice
issued under subsection 44C(1) or 44D(1) shall be guilty of
an offence and shall, on conviction, be liable to a fine not
exceeding five million ringgit or to imprisonment for a
term not exceeding five years or to both.

Power of Governor to
compound.

51A.   (1)   The Governor with the concurrence of the
Minister may compound any offence punishable under this
Act by accepting such sum of money as he thinks fit not
exceeding the amount of the maximum fine to which that
person would have been liable if he had been convicted of
the offence.

  (2)   Any monies paid to the Governor pursuant to
subsection (1) shall be paid into and form part of the
Consolidated Fund.

Fiat of Public
Prosecutor.

52.   No prosecution in respect of any offence under this
Act shall be instituted without the consent in writing of the
Public Prosecutor.

Jurisdiction. 53.   Notwithstanding the provisions of any other written
law, a Sessions Court shall have jurisdiction to try any
offence against this Act and to impose the full penalty
prescribed therefor.

Bank may be
represented by

director, officer or
employee of Bank in

civil proceedings.

53A.   Notwithstanding the provisions of any written law—

(a) in any civil proceedings by or against the Bank;
or

(b) in any other civil proceedings in which the Bank
is required or permitted by the court to be
represented, or to be heard, or is otherwise
entitled to be represented or to be heard,

any director, officer or employee of the Bank authorised by
the Governor for the purpose, may, on behalf of the Bank,
institute such proceedings or appear as an advocate therein
and may make all appearances and applications and do all

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acts in respect of such proceedings on behalf of the Bank.

Power of Bank to
make regulations.

54.   The Bank may, with the approval of the Minister,
make regulations for the better carrying out of the objects
and purposes of this Act.

Fees and charges 54A.   The Bank may impose such fees or charges as it
deems appropriate for the services provided by the Bank in
relation to its functions under this Act or any other written
law.”.

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55.   (Omitted).

PART IX

EXTENSION OF JURISDICTION

Special provision
relating to extension
of jurisdiction, etc.,

of the Bank.

56.   Whenever the Government shall have entered into an
agreement with the Government of any territory whereby
the jurisdiction powers and obligations of the Bank may be
extended to any such territory, and such agreement has
been approved by resolution of the House of
Representatives, the Yang di-Pertuan Agong may by order
amend, adapt or repeal such provisions of this Act as
appear to him necessary for the purpose of bringing the
provisions of this Act into accord with the provisions of
such agreement.

As amended by latest amendment Act Central Bank of Malaysia (Amendment) Act 2008 (Act A1328)

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