PLAGIARISM DECLARATION FORM (T-DF)

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Full name and IC No: NG WEI SHENG (980108-10-6007)

Date: 05 SEPTEMBER 2020

Assignment (1) Declaration Form

Semester/Year 2/2020
Student’s Name NG WEI SHENG
Student’s ID No: 032190033
Course Code BBF 307/03
Course Title BUSINESS OF BANKING
Class Code 3-BOB1
Assignment No: 1
No. of pages of this 12
Assignment (including this
page)
Tutor MR GOBINATHAN A/L MANICKAM

Course Coordinator MR GAN SOON CHUAN

T-DF Assignment Declaration Form (1/2020 version #003)
QUESTION 1

Bank Negara is the central bank of Malaysia. Bank Negara Malaysia (the Central Bank of
Malaysia), is a statutory body which started operations on 26 January 1959. Bank Negara
Malaysia is governed by the Central Bank of Malaysia Act 2009 (BNM, 2020). The role of
Bank Negara Malaysia is to promote monetary and financial stability. This is aimed at
providing a conducive environment for the sustainable growth of the Malaysian economy.

Two objectives of Bank Negara and critically analyze the successes and misses of these
objectives in the context of the central bank’s role in the country’s monetary and banking
structure.

Firstly, the main objective of Bank Negara is to maintain a proper level of monetary flow in
the entire economy and it has to design a proper monetary policy in order to determine the
flow of money in the economy through controlling and stimulating the demand and it will
also help in controlling and stimulating inflation in the economy so it will help in overall
monetary demand and supply in the economy and maintain economic stability to counter
different economic cycles. Central Bank of Malaysia has been successful to a large extent in
order to control the monetary flow in the economy. The prudent conduct of monetary policy,
which has seen generally low and stable inflation for decades and thereby, preserving the
purchasing power of the ringgit. The Bank is also responsible for bringing about financial
system stability and fostering a sound and progressive financial sector. There is now in place
a well-diversified, comprehensive and resilient financial sector, that is able to meet the
increasingly sophisticated needs of consumers and businesses, and which has become a
growth driver in the economy.

it has another objective of generation of adequate employment in the economy which will be
helpful in supporting Gross Domestic Product and it will also help in maintaining the
economic stability in the country. The bank has been successful to a large extent because it
can be seen that Malaysia has a large proportion of development through high level of
employment. Bank Negara provides good technical and research support on growth-related
issues to enhance formulation of monetary and credit policies in promoting monetary stability
and ensuring the availability of adequate credit to finance economic growth.
Bank Negara plays an important role to maintain the monetary flow and economy growth.
QUESTION 2

Electronic banking is efficient banking service provided by banks where an electronic

medium or platform is used by users of banks to access their funds. There is no need for
customers to visit the bank for their financial transactions. Since more and more people are
using internet these days, this digital platform became more convenient and easier for users.
Electronic banking is an all forms or banking services and transaction through electronic.

Though electronic banking has been a buzzword for a few decades now, the services
provided still has its ups and downs. Two electronic banking services I am familiar with is
online banking and ATM machine

Online banking enables bank customers to handle account management and perform
transactions directly with the bank through internet. Online banking is also known as internet
banking. Online banking allows customers to check their bank balances, pay utilities and
even allow us to perform a funds transfer to another bank account in just a sec of time.
Customers are able to access to all of their accounts through an internet connection using the
banks own website or a commercial software package such as quicken or money (Paul,
2020).
Everyone is allowed to use online banking services.

The strengths of using online banking is we are able to access and use the services twenty-
four seven which means that online banking services is available at every time and every day.
If we need money urgently we are able to access the account easily. Furthermore, using
online banking can save a lot of time. Online banking allow us to checking the balances and
view record of your transactions. We also enable to pay utilities bills automatically every
month with easy to set up auto payment. By performing online banking, we are able to print
statements for our tax and personal record.

In general, online banking sites and mobile apps are designed to be secure and banks are
continually putting updated security protocols in place. However, no system is completely
foolproof and accounts can be hacked, resulting in identity theft via stolen login credentials
(Elisabeth, 2019).  if the bank's servers go down or are temporarily unavailable due to
scheduled site maintenance, you won't be able to gain online or mobile access to your
banking information. If there is an error performing online banking transactions we have to
go to the branch and talk to worker of the bank or we have to make a phone call to the bank
customer service to raised up the issues. Daily or monthly mobile deposit limitations may
make it difficult for individuals, but especially businesses to make large deposits online
(Elisabeth, 2019). Also, not all types of checks are easily read by computer scanning
software. 

An automated teller machine is also known as ATM. An automated teller machine (ATM) is
an electronic banking outlet that allows customers to complete basic transactions without the
aid of a branch representative or teller. Anyone with a credit card or debit card can access
cash at most ATMs.

The strengths of using ATM electronic banking is we are allowed to withdraw cash in
anytime and anywhere as long there is an auto teller machine (ATM). It is convenient for
traveler using ATM electronic banking to withdraw money, travelers don’t have to bring tons
of cash when they are travelling. Customers can withdraw the cash within or outside the
country using these machines. ATMs provide convenience to bank’s user. ATMs reduces a
lot of workload for bank worker’s, as this will reduces the queues in the bank premises. The
customers also will get brand new notes from the machine. In other words, customer does not
get old or soiled notes from the machine. ATMs provided without services error. Customer
will get the exact amount of they want to withdraw. We are able to check our balance
In our account by using ATMs.

The weakness of the Auto teller machine (ATM) is we are unable to withdraw the cash if our
card has issues. Limitations of cash withdrawal are one of the weakness of ATMS. Most of
the bank does not allow to withdraw more than twenty-thousand at a time. Possibility of
misusing ATM card. If the card is misplacing, lost or stolen may be used. There is an extra
service charge if withdraw the cash from other’s bank ATM. For example, if our card issue
by CIMB Bank but we withdraw the cash from Maybank instead CIMB, there will be a
service charge applied. Sometimes, the machine will went malfunction and does not return
your card and the cash that you had withdrawn. You have to visit the branch premises to
allow them to reissue your bank card.
These are the electronic banking that I am familiar with. Electronic banking is very
convenient for us.
QUESTION 3

Consumer loans are loans that are granted for personal use such as car loan, home loan, credit
card, and personal loan. Consumer loans or consumer credit consists of loans to individuals
for personal, household, or family consumption. There are four factors discussed in the
course material on the pricing of consumer loans. Examine these factors on their relevancy
with the current changes in the banking environment.

Hire purchase is an arrangement for buying expensive consumer goods, where the buyer
makes an initial down payment and pays the balance plus interest in installments (Will,
2019). Hire purchase can benefit consumers with poor credit by spreading the cost of
expensive items that they would otherwise not be able to afford over an extended time
period. With hire purchase agreements, the ownership of the merchandise is not officially
transferred to the buyer until all the payments have been made. Generally, bank in Malaysia
offers financing up to 90% of the total loan amount. The maximum duration for the hire
purchase agreement are 9 year. Hire purchase loan in Malaysia normally are for customers
that want to buy a vehicle. The bank may require a guarantor to secure the loans, depending
on the credit ability of the owner. If the owner unable to pay the instalments, the guarantor is
responsible to pay for the owner. If the owner or guarantor fails to pay the instalment, the
bank has the right to take back the vehicle.

Credit cards serve many useful functions, including the ability to pay for purchases when
you don't have cash on hand (Eric,2019). The credit card issuer essentially loans you the
money to make the purchase, and you will be able to repay that loan at a later date while
being charged a certain interest rate. One of the most important elements of a credit card is
the annual percentage rate of interest that you pay on purchases. This is what the credit
card company charges you to loan you the money to use when you shop. The interest rate
for credit card can be up to 25% if you failed to make minimum payment on the card on
time. Normally, there will be a limit on the credit card. The limit of the credit card is
depending on the capability and ability of the owner. For example, if your credit card limit
is 4000, you only able to swipe the amount up to 4000. If the spending on the credit card
has over the credit card limit, the owner has to pay the credit card loan only first only can
swipe again.
A personal loan is a lump sum money that are borrowed from the bank that can be used for
vacation, home renovation, debt, education or any other purpose. A personal loan is a loan
you qualify for based on your credit history and income. Personal loans are sometimes called
signature loans or unsecured loans because there is typically no collateral required to secure a
personal loan (Justin, 2020). When you get a personal loan, you will get the money in lump
sum, but we are paying back the loan by monthly instalment with interest rate. The interest
rate is depending on the credit avaibility of the owner. Sometimes, the interest rate will be
lower than credit card loan if the owner’s credit avaibility is good. Personal loans typically
have fixed interest rates. Your interest rate doesn't change, so you make the same monthly
payment for the life of your loan. The interest rate for personal loan is vary from 10-20%.
You usually repay personal loan over one to five years. The maximum duration of repayment
personal loan is 10years.

A home loan (or mortgage) is a contract between a borrower and a lender that allows
someone to borrow money to buy a house, apartment, condo, or other liveable property. A
home loan is typically paid back over a term of 10, 15 or 30 years. For most people,
purchasing a home is the biggest financial decision they will ever make. And with homes
often costing hundreds of thousands -- and in some cases millions -- of dollars, most people
can't afford to pay cash for the entire property up front. There are several types of housing
loan, but each home loan is defined by four main factor. The Principal, or the amount of
money you're borrowing. This amount is typically the purchase price minus your down
payment, minus closing costs and other related fees. The Term, or how long you have to
repay the entire loan. The term of a home loan can range between five to 30 years. The
Interest Rate, or the annual amount you need to pay the lender to borrow the money, shown
as a percentage of the current principal balance. The Repayment Frequency, or how often you
make payments. Borrowers usually pay back their mortgages on a monthly or bi-weekly
basis.

These are the four type of consumer loans that are discussed in the course materials. Mostly,
the loans are offered by the bank. Every bank has their own loans to offer to customer, but the
benefits of the loans is different for every bank.
QUESTION 4 (A)

Line of credit and revolving credit are two types of financial arrangements available for a
business for availing credit. Both the facility differs from each other in various aspects. Major
difference between the two facility is that line of credit is one-time financial arrangement
where account of borrower gets closed as soon as the borrower spends and pay back its credit
amount. The account can't be used again and is closed immediately when whole amount of
credit is paid back by client. This type of financial facility is also called non-revolving loans
as this account can't be used again and again. Wherever, on the other hand revolving loans is
such facility under which individual can use its account many times as per their needs. The
account remain opens as long as the borrower and lender wishes to continues. Here, a
specified credit amount is decided by lender to clients as per their credit score. Customer can
avail the credit facility within the specified limit again and again even after paying back the
whole credit amount. Another major difference between the two is that line of credit facility
provides economical loans as compared to revolving credit facility. Interest rate charged in
non-revolving loans is quite lower. A line of credit is a type of revolving credit, which works
similar to a credit card. Both a line of credit and revolving credit have a set amount available
to use, and when you pay down or pay off the amount, the credit is available for you to use
again (Kristie, 2017).
QUESTION 4 (B)

For a business facing liquidity, it is ideal to avail revolving loan credit facility. Firstly the
credit account under this facility can be reused many times till the lender and borrower
wishes to do so. Lender sets the specific credit limit for borrower as per their credit score, and
they can easily take loans up to that limit again and again. It saves the business time of
involving into various formalities for getting credit approval from institutions every time they
wishes to take loan. Once, there account is opened they can use it various times whenever the
need arises. Second advantage is that this facility increases the purchasing power of business
by raising the credit limit over the time. Business credit score get increased if it make regular
and consistent payments with lender.
REFERENCES

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ATM. Retrieved August 27, 2020, from https://kalyan-city.blogspot.com/2011/02/automated-
teller-machine-atm-advantages.html

Kenton, Will. (2019, July 11). Hire Purchase Agreements. Retrieved August 28, 2020, from
https://www.investopedia.com/terms/h/hire-purchase.asp

Kagan, Julia. (2020, July 14). Credit Card Debt. Retrieved August 30, 2020, from
https://www.investopedia.com/terms/c/credit-card-debt.asp

Lorette, Kristie. (2017, November 21). Line of Credit Vs. Revolving Credit. Retrieved
August 26, 2020,from https://smallbusiness.chron.com/line-credit-vs-revolving-credit-
3697.html

Natter, Elisabeth. (2019, February 13). Online Baking Disadvantages. Retrieved August 24,
2020, from https://smallbusiness.chron.com/online-banking-disadvantages-2248.html

Pritchard, Justin. (2020, August 30). What is a Personal Loan? Retrieved September 02,
2020,from https://www.thebalance.com/what-is-a-personal-loan-4768871

Strauss, Eric. (2019, January 16). What is a Credit Card Loan? Retrieved August 31, 2020,
from https://budgeting.thenest.com/credit-card-loan-24688.html

Tracy, Paul. (2020, August 05). Online Banking. Retrieved August 20, 2020,from
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