Table of Contents

TOPIC : ISSUES REGARDING THEIR ISLAMIC FINANCIAL.....................................................1

OPERATION OF PRODUCT OR SERVICE...................................................................................1
BACKGROUND OF COMPANY....................................................................................................14
MISSION............................................................................................................................................14
OBJECTIVE......................................................................................................................................14
TYPE OF INDUSTRY.......................................................................................................................14
.............................................................................................................................................................15
BOARD OF DIRECTORS................................................................................................................15
Non-Independent Executive Director.....................................................................................15
DATUK NOR AZAM BIN M. TAIB..........................................................................................15
Senior Independent Non-Executive Director.......................................................................16
Trade financing - i...............................................................................................................................18
GUARANTEE BANK - i...........................................................................................................................18
major risks inherent.............................................................................................................................19
LATTER FOR CREDIT – I.........................................................................................................................19
Major risk............................................................................................................................................19

COURSE : ISLAMIC BANKING OPERATIONS

COURSE CODE : PIB2023
NAME OF LECTURER : SITI ARFAH BINTI ABDULLAH

TOPIC : ISSUES REGARDING THEIR ISLAMIC FINANCIAL

OPERATION OF PRODUCT OR SERVICE

ID NUMBER
NAME

BGJ232510448
MUHAMMAD SYAKIR IRFAN BIN
SHARMIZEE

BGJ232511160
ASMAWI BIN ABDUL RAHMAT

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MUHAMMAD DANISH HAQIMI BIN MOHD BGJ232511320
HELMI

BGJ232511152
MUHAMMAD FAIZ IRFAN BIN MOHAMAD
ZAILI

PREPARED FOR : PUAN SITI ARFAH BINTI ABDULLAH

ACKNOWLEDGEMENT

In the name of God the Most Merciful and Most Merciful, All praise and thanks be to the
presence of God, Lord of the worlds and blessings upon His Messenger. I would like to thank
Him above all else for blessing me with the patience and fortitude to complete the report.
First of all, I would like to express my deepest appreciation and thanks to all parties who
gave me the opportunity to complete my PIB subject report. Infinite gratitude to the dear
lecturers who have guided me and other friends throughout from beginning to end. I would
like to express my gratitude to my final year coordinator, Mrs. Siti Arfah binti Abdullah, who
helped me a lot to coordinate me. His expert guidance, class advice and all update
notifications have provided me with relevant information in achieving the definition and
objectives of this report.

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HSBC AMANAH MALAYSIA BERHAD

BACKGROUND OF COMPANY HSBC AMANAH MALAYSIA BERHAD HSBC Bank

Malaysia Berhad led by Peter Wong and Mukhtar Hussain as deputy chairman and CEO.
The bank was incorporated in 1984 and is a subsidiary of HSBC Group, a wholly owned
subsidiary of HSBC Holding plc headquartered in London. HSBC Holding plc is the
seventh largest bank in the world. It serves customers worldwide from around 8,000
offices in 87 countries and territories in Europe, the Asia Pacific Region, the Americas, the
Middle East and Africa. Started operations in Malaysia in 1984 and it was officially known
as HSBC Bank Malaysia Berhad in 1999. One third of HSBC branches have offered
Islamic banking products and services under their subsidiary HSBC Amanah Malaysia
Berhad.

In addition, the opening of HSBC Bank is not only in Penang, but this branch has already
expanded to all states in Malaysia, for example in Melaka in 1909 and the end of 1912.
Including the opening of its offices in Ipoh, Kuala Lumpur, Johor Bharu and Kota New. In
the 1920s and 1930s, this bank opened more branches, such as in Sungai Petani in 1922,

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Kuantan in 1929, Muar in 1930, and Kuala Terengganu in 1936. The opening of the first
branch in Sabah was in 1947 was also established in Kota Kinabalu followed by
Sandakan and Tawau after a year of opening the first branch. In Sarawak, branches were
opened in Kuching in 1958 and 1964, while in Sibu in 1959.

Therefore, Hongkong and Shanghai Baking Corporation Limited also made acquisitions
including The Mercantile Bank in 1949 and has a network of 40 branches throughout
Malaysia. Through the acquisition of The Mercantile Bank operating in Malaysia in 1860,
HSBC is indirectly the oldest bank in Malaysia.

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Furthermore, HSBC was the first foreign bank to be awarded a license to operate Takaful
(Islamic insurance) business in Malaysia in 2006. HSBC Amanah Takaful (Malaysia) Sdn
Bhd is a joint venture between HSBC Insurance (Asia-Pacific) Holdings Limited (49
percent holding). , Jerneh Asia Berhad (31 percent holding) as well as the Malaysian
Employees Provident Fund Board (20 percent shareholding). It began operations in
August 2006. In March 2019. Later, HSBC exited the Takaful manufacturing business to
focus on its banking and wealth operations in Malaysia. In 2007, HSBC Bank Malaysia
was the first foreign bank incorporated in the country to be granted an Islamic banking
subsidiary license in Malaysia and HSBC Amanah Malaysia Berhad is an Islamic bank
wholly owned by HSBC Bank Malaysia. Started operations in August 2008. Has a network
of more than 50 branches in Malaysia.ORGANIZATIONAL CHART HSBC AMANAH MALAYSIA
BERHAD

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 1. Datin Che Teh Ija
Binti Mohd Jalil
Independent Non-Excutive
Chairperson
2. Mukhtar Malik Hussin
Non-Independent
Non Executive Director

3. Dato' Omar Siddiq

Bin Amin Noer Rashid
Non-Independent
Executive Director

4.Ho Chai Huey

Independent Non-
Executive Director

5.Lim Tiang Siew

Independent Non-
Executive Director

6.Datuk Md Arif Bin

Mahmood
Independent Non-
Executive Director

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MISSION AND VISION HSBC AMANAH MALAYSIA BERHAD

Mission

HSBC Amanah mission is to provide the best solutions for our customers doesn’t stop at
what their offer. Their go beyond banking to fuel their customers’s growth and help them
succeed.

Vision

To offer banking and financial solutions that adhere to the principles of Islamic finance,
ensuring that its products and services are free from interest (riba) and comply with other
Shariah guidelines.

Objective

The role of the Board is to provide entrepreneurial leadership of the Bank within a
framework of prudent and effective controls which enables risks to be assessed and
managed. The Board is
collectively responsible for the long-term success of the Bank and delivery of sustainable
value to shareholders.

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TYPE OF INDUSTRY AND PRODUCTS HSBC AMANAH MALAYSIA BERHAD

The variety of banking products and services includes conventional for individuals and
commercial that has been provided by HSBC Bank Malaysia Berhad. Among the
personal banking products provided by HSBC Bank are savings accounts, current
accounts, credit cards, personal financing, housing financing, property management,
foreign exchange and investments.

HSBC Amanah also provides similar products and services through Islamic banking. It
has two

Islamic financing products. Among the famous ones are HSBC Amanah Personal
Financing-i and HomeSmart-i. Personal Financing-i is an Islamic financing plan that is
100% Shariah compliant that offers to the employment sector. HomeSmart-i is for
housing financing. HSBC Bank not only provides loan services, it also offers complete
insurance coverage products from family insurance plans to special insurance plans for
the elderly.

In addition, HSBC Bank also offers several products and services for commercial
customers. Among them are business accounts, current accounts, foreign currency
accounts and business financing in the form of loans and assets. There are several
facilities provided by HSBC, such as online banking. Not only that, but HSBC also
provides banking facilities such as express banking, banking by phone and also mobile
banking through applications for smartphones.

HSBC Bank also offers several credit cards to customers with various benefits. Each
credit card listed has different advantages and attractive features such as rewards.

Among them is the HSBC Premier World MasterCard which can give 10 times the return
of reward points and travel rewards and the fee is free for life. For customers who love to
shop, the HSBC Platinum credit card offers 8x reward points with every online and offline
purchase transaction in the country or abroad. Get a discount and only have to pay
RM240 for the annual fee. By paying a fee of RM600, customers can get an HSBC Visa
Signature that gives 8 times the reward points for every
RM1 with domestic or overseas purchases. HSBC Advance Visa Platinum also comes
with Premium VISA and HSBC features that give 3 times the reward (rewards points) for

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every expenditure and the fee is free for life (only for HSBC Advance account owners).
The last one is the HSBC Amanah MPower
Platinum Credit Card-i which o

INTRODUCTION HSBC AMANAH MALAYSIA BERHAD

HSBC Bank which has been shortened from The Hong Kong and Shanghai Banking
Corporation Limited began operations in 1884 when the bank established its first office in
Malaysia, Penang, with permission to issue paper money. HSBC Bank Malaysia Berhad,
established in 1984, became the first foreign financial institution to be localized in 1994.

HSBC Bank Malaysia is the largest foreign bank in Malaysia, offering a wide range of
personal and commercial services from a network of branches and direct channels. The
bank has a network of 40 branches across the country. In addition, HSBC Bank has also
been offering Islamic financial services in Malaysia since 1994.

HSBC Bank Malaysia Berhad is the official name for HSBC in Malaysia. In 1999, HSBC
Bank became the first foreign bank to be incorporated locally. Received the license of the
Islamic banking company known as HSBC Amanah Malaysia Berhad in 2007.

However, after 130 years, Malaysians are still not qualified to get the role of Chief
Executive Officer (CEO) even though Malaysians have the talent to lead some of the
largest conglomerates in the country and abroad. The Malaysian Government gives all
privileges to
HSBC Bank. Still continuing with colonial thinking, taking out Malaysia's wealth to the
United Kingdom, while continuing to rob its workers of job security.

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HSBC AMANAH MALAYSIA BERHAD PRODUK

LETTER OF CREADIT

A Letter of Credit (LC) from HSBC (Hongkong and Shanghai Banking Corporation) is a
financial instrument issued by HSBC to facilitate international trade transactions. HSBC is
one of the world's largest and most well-known banks, with a strong presence in global
trade finance. The letter of credit serves as a guarantee of payment from HSBC to the
seller (beneficiary) on behalf of the buyer (applicant) under specified conditions. HSBC,
like many other banks, offers various types of letters of credit (LC) services to facilitate
international trade and financial transactions. A letter of credit is a financial instrument
issued by a bank at the request of the buyer (applicant) in favor of the seller (beneficiary).
It serves as a guarantee of payment for the seller, provided they meet the conditions
specified in the letter of credit.

1. Initiation:

• The buyer and seller agree to use a letter of credit for their transaction.

• The buyer (applicant) applies to HSBC for the issuance of a letter of credit
in favor of the seller (beneficiary).

2. Issuance:

• HSBC reviews the creditworthiness of the buyer.

• If approved, HSBC issues the letter of credit, outlining the terms and
conditions for the transaction.

3. Terms and Conditions:

• The letter of credit specifies the conditions that the seller must meet to
receive payment.

• Common conditions include presenting specific documents (such as

invoices, bills of lading, and certificates of origin) and complying with the
terms of the agreement.

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 4. Shipment and Documentation:

• The seller ships the goods and prepares the required documents as per
the terms of the letter of credit.

• The seller submits the documents to their bank (usually referred to as the
advising or negotiating bank).

5. Document Examination:

• The advising or negotiating bank reviews the documents to ensure they

comply with the terms of the letter of credit.

• If the documents are in order, the advising or negotiating bank forwards

them to HSBC.

6. Payment:

• HSBC examines the documents and, if they comply with the terms of the
letter of credit, makes payment to the seller.

• The buyer reimburses HSBC for the payment made.

HSBC's letter of credit services may offer various types, including documentary letters of
credit, standby letters of credit, and others. These instruments are commonly used to
mitigate risks in international trade, providing assurance to both the buyer and the seller
that the terms of the transaction will be fulfilled.

It's important for all parties involved in a letter of credit transaction to thoroughly
understand the terms and conditions outlined in the letter of credit and to adhere to the
specified procedures to ensure a smooth and secure trade transaction.

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BANK GUARANTEES

Bank Guarantee is a letter of guarantee issued by HSBC Bank Malaysia Berhad that is
subject to Bank Guarantee facilities limits given by the Bank and on behalf of our customers
to third parties as guarantors who promise to pay the agreed amount if the customer fails or
defaults in fulfilling their contractual obligations under the warranty terms and conditions.For
the immediate issuance of a Bank Guarantee and the customer does not yet have a Bank
Guarantee facility, Guarantee Smart is an alternative option where a Bank Guarantee can be
issued subject to a 100% cash margin in the Bank's currency Guarantee. Payment shall be
vested in the Bank free and clear of any lien, claim, charge or encumbrance.

 Offer Bond.Tender Offer Bonds

This guarantee is requested by the client (bidder) to support their tender for the contract from
the prospective buyer. Buyers will granted financial remedies if the tender is withdrawn by
the successful bidder or the successful bidder fails to sign the contract, or does not provide a
subsequent bond, such as a Performance Guarantee, to support the contract. The purpose
is to prove financial position of the bidder.

 Execution bond

This guarantee replaces the Tender Offer Bond if the tender is accepted. Performance Bond
is an undertaking on our behalf customer (principal), to pay cash if the principal's obligations
under the contract are not settled. Such amount the bond is usually based on a percentage
of the contract value and is much larger than the relevant Tender Advance Payment
Guarantee This guarantee is an undertaking to pay, on behalf of our client (principal), the
amount paid in advance under the contract by the contracting party (beneficiary) for
obligations that have not yet been fulfilled

 Retention Bonds

The contract may allow the contracting party (beneficiary) to retain a portion of the contract
amount until substantial completion. contract has occurred, such as repair work during the
warranty period. The recipient may be willing to submit this deposit to the principal upon
presentation of this guarantee.

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Trade financing

With the advancement of technology, trade is no longer limited to tangible goods. Apart from
new economy companies and service providers, more industries are offering and acquiring
intangible services and solutions, including application development, advertising space and
more. therefore HSBC has extended trade solutions to services used or sold during different
stages of the trade cycle With service trade financing solutions, Consumers can be financed
through trade finance solutions instead of conventional overdrafts to service-related
operational activities.Even as a client's business evolves over time, solutions from HSBC
can help you.

Trade financing in Services

 Additional product options:

obtaining financing through trade finance solutions rather than conventional overdrafts to
service-related operational activities

 Easy production:

Easy document submission with shorter lead times

 Easy production:

Easy document submission with shorter lead times

Trade in Services solutions apply to both service providers and new economy companies, as
well as services in traditional sectors and industries. Here are some examples.

Examples of traditional sectors and industries:

Manufacturing

• Logistics

• Advertise

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• Utilities

• Quality checks (eg laboratory tests)

• Design fees

Retail / Wholesale

• Advertise

• Logistics

• Outsourced services (eg cleaning, security)

• Stock insurance fee

Infrastructure

• Subcontracted projects

• Outsourced services (eg installation, inspection, maintenance fees)

• Savings

• Performance guarantee

Services and the New Economy

Advertise

• Purchase of advertising space

• Receivables of advertising fees

Logistics

• Air transport services

• Airport fees

• Equipment maintenance or rental

• Logistics fee receivable

Professional Services

• Completion of subcontracted services

• Service charges receivable

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• Performance guarantee

Telecommunications

• Working capital

• Outsourced services

• Performance guarantee

eCommerce

• Advertise

• Logistics

• Working capital

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BACKGROUND OF COMPANY

malaysia building society berhad (mbsb) was incorporated in 1950. in 1956, it changed its
name to malaya borneo building society limited
(mbbs), with the malaysian government as its main shareholder. mbbs was subsequently
listed on the malaya and singapore stock exchanges in august 1963. on 6 november 2017,
mbsb entered into a share purchase agreement with the shareholders of asian finance bank
berhad ("afb/vendors") for the proposed acquisition by mbsb. consideration
("acquisition").the acquisition was approved by mbsb shareholders on 23 january 2018. afb
became a wholly owned subsidiary of mbsb on 7 february 2018. afb underwent a rebranding
process on 2 april 2018 and changed its name to mbsb bank berhad ("mbsb bank").

MISSION
Providing sharia compliant banking facilities to retail, pks and corporate customers.

VISION

Becoming a progressive islamic bank leader.

OBJECTIVE
Provides a list of financing products through its digital capabilities and innovation to provide
good services to its customers

TYPE OF INDUSTRY
Bank mbsb berhad is a bank that has been given a license by bank negara malaysia to carry
out islamic banking business. mbsb bank berhad is a fully islamic banking organization in
malaysia that provides shariah compliant banking facilities to retail, sme and corporate
customers. malaysia building society berhad (mbsb) provides a list of financing products that
through its digital capabilities and innovation to provide good services to its customers. mbsb
bank provides its services through a nationwide network of branches and online such as
mobile banking and virtual branches.

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BOARD OF DIRECTORS

Encik Sazaliza Bin Zainuddin

Non-Independent Executive Director

Nationality/Age/Gender Malaysian / 50 / Male

Date of Appointment 03 May 2021

Academic/Professional Qualification(s)

• Association of Chartered Certified Accountants, UK (ACCA)

• BA (Hons) in Accounting & Finance, Southbank University, United Kingdom
• Diploma in Accountancy, UiTM

Working Experience and Occupation

Present Directorship(s) and/or Appointment(s):

• Director, Malaysia Building Society Berhad

• Chief Operation Officer of the Employees Provident Fund

DATUK NOR AZAM BIN M. TAIB

Chief Executive Officer

Appointment to current position01 July 2022

Qualifications

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 • Master of Business Administration, Charles Sturt University, Australia
• Bachelor of Science in Accounting, University of Wyoming, USA
• American Associate Degree, Indiana University, Bloomington, USA
• Certified Qualification in Islamic Finance, Islamic Banking and Finance
Institute Malaysia (CQIF)
• Intermediate Qualification in Islamic Finance, Islamic Banking and Finance
Institute Malaysia (CQIF)
• Associate Qualification in Islamic Finance, Islamic Banking and Finance
Institute Malaysia (AQIF)

Datuk Johar Bin Che Mat

Senior Independent Non-Executive Director
Date of Appointment19 December 2017

Academic/Professional Qualification(s)

• Bachelor of Economics, University of Malaya

Working Experience and Occupation

Present Directorship(s) and/or Appointment(s):

• Chairman, MNRB Holdings Berhad

• Chairman, Takaful Ikhlas Family Berhad
• Chairman, Takaful Ikhlas General Berhad
• Chairman, Edelteq Holdings Berhad
• Chairman, Malaysian Re (Dubai) Ltd
• Director, Dagang NeXchange Berhad
• Director, Motordata Research Consortium Sdn Bhd
• Director, Ping Petroleum Ltd

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Datuk Azrulnizam Abdul Aziz

Independent
Non-Executive Director

Date of Appointment01 March 2017

Academic/Professional Qualification(s)

• Chartered Professional in Islamic Finance

• Executive Education - Driving Digital Strategy, Harvard Business School,
USA
• Leadership Programme, Oxford University, UK
• MBA, International Business, University of Hartford, Connecticut, USA
• BBA Marketing, Wichita State University, USA

Diploma in Business Studies, UiTM Malaysia

Working Experience and Occupation

Present Directorship(s) and/or Appointment(s):

• Chairman, Perbadanan PR1MA Malaysia

• Independent Director, Thriven Global Berhad
• Independent Director, AmMetlife Takaful Berhad
• Executive Director, CR FinaCapital Sdn Bhd
• Director, Petrowangsa Sdn Bhd
• Director, Goldina International Sdn Bhd
• Director, Fuze Development Sdn Bhd

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Trade financing - i
MBSB Bank has the ability to issue letters of credit, which function as an assurance that the
importer's bank would pay the exporter provided specific requirements are met. This lessens
the risk for each party taking part in the deal. Documentary collections are another service
that MBSB Bank offers. In this scenario, the exporter gives the bank the task of collecting
money, and in return, the bank sends paperwork to the importer's bank. Trade finance might
be provided by MBSB Bank in the form of loans designed especially for trade-related needs.

THE LOANS CAN ASIST THE COMPANY:

• Inventory purchase

• Trade cycle cash flow management

• Financing export / inport activities

MBSB Bank may offer exporters finance solutions like pre-export or post-shipment financing
to help bridge the gap between production and payment receipt. In order to finance their
purchases from foreign suppliers, importers might take advantage of import financing options
like trade credits or import loans.

GUARANTEE BANK - i
Bank Guarantee-i is an undertaking by the Bank to a named Beneficiary and to an agreed
sum, in case of default by a third party in fulfilling their obligations under the contract.

Shariah concept applicable

The Shariah concept applicable is Kafalah which refers to a contract where the guarantor
conjoins the guaranteed party in assuming the latter’s specified liability.The Bank as
guarantor shall issue BG-i to the third party on behalf of the company which signifies a
guarantee for the implementation of specified project. Bank Guarantee-i allows to
participate in business activities where counterpart requires such guarantee. It is generally
have an expiry date and claims period. All Bank Guarantee-i issued must be specific as to
the amount and period of liability including claims period. financial obligations, obligation

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is to fulfill the beneficiary’s requirement as specified in agreement and payment of Kafalah
fee.shall be responsible and liable to indemnify the Bank as the guarantor against all
obligations imposed for which the Bank Guarantee-i is subject to. Hence you will need to
pay the bank the full guarantee amount should there be a claim from the beneficiary, in
accordance to the terms and conditions of the BG-i facility.

major risks inherent

Should you fail to fulfil the obligations with the Beneficiary and upon claim by the Beneficiary,
the Bank will proceed to honour the guarantee by making payment and debiting your
account and/or may liquidate your collateral.

LATTER FOR CREDIT – I

letter of Credit-i is a written undertaking by the Bank, given to the Seller at the request and
on the instruction of the Buyer/Applicant, to pay at sight or at a determinable future date up
to a stated sum of money within a prescribed time limit and against stipulated documents
which must comply with the terms and conditions. this product about.

LC-i is a written undertaking also known as a Documentary Credit to facilitate trade

transactions. It constitutes an irrevocable and definite undertaking of the issuing Bank
tohonour a complying presentation depending on instructions given by the LC applicant. It is
issued to the beneficiary (seller) at the request by the applicant (buyer) and to pay at sight or
at a determinable future date, up to a stated sum of money within a prescribed time limit and
against stipulated documents presented in compliance with the terms and conditions of the
LC-i. It is govern by International Chamber of Commerce (ICC) under Uniform Custom and
Practice for Documentary Credits (UCP).

Terms and Conditions:

The precise terms and conditions under which payment will be made are specified in the LC.
These conditions usually cover the payment amount, the documentation needed to complete
the payment, information about the cargo, and the LC's expiration date.

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Major risk
There is no major risk since the facility is short term in nature and the rate is fixed for the
whole tenure.

CONCLUSION:

The conclusion, HSBC Bank offers a variety of personal and commercial services from a
network of branches and direct channels. Furthermore, HSBC Bank also offers Islamic
financial services that comply with shariah, which is HSBC Amanah Malaysia Berhad. It has
many benefits and advantages on each different product. It also offers credit and debit cards
to customers. In addition to making it easier for customers to make online payments (online
banking), HSBC Bank also facilities such as expresss banking, banking by phone and also
mobile banking through applications for smartphones. HSBC also gives attractive rewards to
customers who use HSBC credit cards. While MBSB Bank is a full-fledged Islamic Bank in
Malaysia that provides shariah compliant banking facilities to retail, SME and corporate
customers. A wholly owned subsidiary of Malaysia Building Society Berhad (MBSB), the
Bank provides a wide list of financing products through its digital capabilities and product
innovation to better serve its customers. Also, MBSB Bank extends its distribution channels
through its nationwide network of branches and online services such as mobile banking and
virtual branch. For the comparison between HSBC Bank and MBSB Bank, higher profit rated
bank is MBSB Bank with more 1.4% rated compared to HSBC Bank. Indirectly, Bank play
very important roles in the economiec develepmonet of nations as they, to a large extent,
wield control over the supply of money in circulation and are the main stimuli of economic
progress. Economic development is a dynamic and continuous process which is highly
dependent upon the mobilisation of resources, investment, and the operational efficiency of
the various segments of the economy.

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REFERENCE:

1. https://www.business.hsbc.com.hk/en-gb/solutions/service-trade
2. file:///C:/Users/User/Downloads/pds-bank-guarantee.pdf
3. https://www.business.hsbc.com.my/en-gb/solutions/guarantees
4. file:///C:/Users/User/Downloads/hbms-performance-guarantees-
conventional.pdf
5. https://www.business.hsbc.com.my/en-gb/solutions/performance-guarantee
6. https://www.mbsbbank.com

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