LECTURE 13 –

BANKING LAW©
  INTRODUCTION –
History of Malaysian Bank
Banking system existed in
Malaysia since 2nd World
war
 FIRST BANKS IN
MALAYSIA

Foreign bank Local bank

1) 1) Kwong Yik
Chartered Bank Bank
– 1875 2)
2) Bank of Malaya
Hong Kong & S
hanghai Bank –
1884
Source: Source:
https://hr.asia/top-news/malaysia/standard-
http://myheritagebuildings.blogspot.com/2020/1 chartered-first-bank-in-malaysia-to-attain-
0/former-chartered-bank-building-very.html certification-in-workplace-gender-equalit/
https://www.businesstoday.com.my/2021/06/07/hsbc-
malaysias-move-to-outsource-banking-jobs-to-affect-
b40-and-m40-employees-says-nube/
Source: https://en.wikipedia.org/wiki/Kwong_Yik_Bank
Ipoh, 1920
 RELEVENT STATUTES

Takaful Act 1984 Emergency

Financial Services
(Essential Powers)
Act 2013 (LATEST) (REPEALED) Act, 1979

Essential
Islamic Financial Insurance Act 1996 (Protection of
Services Act
(REPEALED) Depositors)
(LATEST)
Regulations 1986

Central Bank of Islamic Banking Act

1983 Loan (Local)
Malaysia Act Ordinance, 1959
2009 (REPEALED)

Banking and
Financial Institutions Exchange Control Treasury Bills Government
Act 1989 (BAFIA) Act 1953 (Local) Act 1946 Investment Act
(REPEALED) (Revised 1977) 1983
(REPEALED)

8
 A LOOK BACK IN TIME
PREVIOUSLY…
BULKY PC, FIXED
& WIRED PHONE

CROWDED,
LIMITED
SPACE, LONG
QUE

DOCUMENTATION MOBILE
BANKING
 MODERN

AUTOMATED TELLER
FRIENDLY STAFF
MACHINE (ATM)

MORE SPACES & COLOURS PHONE BANKING

BIO-METRIC QR PAY
 ‘bank’ – derived  ‘customer’ – a person
maintain his account with
from the Italian bank, without taking into
word i.e banco, consideration the duration &
originally means frequency of operation of his
account.
‘shelf’ or bench.

 ‘banking’ – accepting for

‘banker’ – a dealer the purpose of
in capital or money, lending/investment of
intermediate party DEFINITION deposits of money from the
public, repayable on demand
between borrower or otherwise & withdrawals
& lender. by cheques, draft order or
otherwise.
LEGAL DUTIES – CUSTOMERS
& BANKERS
 To inform bank
of forgeries

To draw To Examine
cheques Passbooks and
carefully Bank Statements

CUSTOMER’S
DUTIES
Must write the amount
in numbers and words.
 CASE: LONDON JOINT STOCK BANK V
MACMILLAN (1918) AC 777

This was a clear case of a

breach of duty.
Test laid down: a customer
commits a breach of duty if he
draws a cheques in a manner
which facilitates fraud.
 Kredit Bank Berhad
(Incorporated in Malaysia)
Kuala Lumpur 2 January 2011

Pay Rosmawani Binti Che Hashim

2
(in words)__leave blank____________

(Signed)_______
 CASE: EA BARBOUR LTD V.
HO HONG BANK LTD
Must write - $2,250 Blank space
Cheques written in numbers as - $_2,250
Letter o
Cheques written in words as – Twe (left
enough space) thousands two hundreds and
fifty dollars
Add/forge
Forged - $12,250
Add/forge
Twelve thousands two hundreds and fifty
dollars
Became - $12,250
Relied on the notice printed on the back
cover of cheques book then issued by the
Ho Hong Bank:
‘In filling up a cheque, the amount to be
‘written in words commencing on the left
hand side close to the words Dollars
without any space between the words,
and the figures made close to the dollar
and as plainly as possible’.

18
 To inform the bank of any forgery
on a cheques as soon as he becomes
aware of it.
Also known as ‘Greenwood duty’.

19
 GREENWOOD V MARTINS BANK LTD [1933] AC 51

YOU’VE FORGED MY
SIGNATURE!

SORRY darling…I really need

the money to help my sister…
k, stop sob sob sob
crying, I
forgive Several months later….

u…

You’ve cheated, your story

was untrue and I’l report
this matter!!!
 Serve her
right, I’d just
threatened
her….

When the husband

came back, he found….

Husband later sued the bank for

Approving wife’s withdrawal without his authority…
 The ptf was now precluded
from setting up the forgery as
he had led the bank to
believe that the signature
were genuine. He was
therefore estopped.
 To check the monthly bank
statements & notify the bank of
any items debited not authorized
by them.

On failure to notify the bank

within a specified period, the
statement will be deemed to be
approved or confirmed.
 Rights to set-off
and
combination of
accounts
Duty to
honour Right of lien
cheques

BANKER’S
RIGHTS &
DUTIES
 Death of
customer

Closure of Bankruptcy of
account customer

TERMINATION