What does BAFIA mean in BANKING
BAFIA stands for Banking and Financial Institutions Act. It is an Act that was created by the Malaysian Government in 1994 to regulate, supervise, and promote the banking and financial sector in Malaysia. It sets out the rules and regulations governing the operations of banks, financial institutions, insurance companies, capital markets intermediaries, takaful operators, discretionary fund management companies, as well as money services businesses in Malaysia. This Act helps protect investors’ interests by ensuring that any party conducting business activities within its scope abides by certain standards of professional conduct. BAFIA also contains provisions that provide legal protection for creditors and borrowers alike.
BAFIA meaning in Banking in Business
BAFIA mostly used in an acronym Banking in Category Business that means Banking and Financial Institutions Act
Shorthand: BAFIA,
Full Form: Banking and Financial Institutions Act
For more information of "Banking and Financial Institutions Act", see the section below.
What is BAFIA?
BAFIA stands for Banking and Financial Institutions Act which was established in 1994 to efficiently regulate banking and finance related activities while ensuring adequate customer protection. The core objective of this Act is to ensure a safe and sound financial system through proper supervision of licensed entities such as commercial banks, finance companies, Islamic banks, finance institutions etc., engaged in banking and finance related activities including consumer credit activity or leasing activity. Under this Act there are two key authorities responsible for regulating the activities of Banks; Bank Negara Malaysia (BNM) serves as both regulator and supervisor over licensed financial institutions while Securities Commission (SC) regulates those involved in capital market intermediaries such as securities dealers, unit trust managers etc.,In addition to this there are 13 other government agencies/institutions with direct regulatory functions under BAFIA like National Deposit Insurance Corporation (NDIC) responsible for deposit insurance scheme etc.,
Provisions Under BAFIA
The provisions include powers to issue different types of licenses to carry out various kinds of banking-related activities such as deposit taking, credit card issuing and asset-backed financing etc.; requirements applicable on licensees regarding minimum capital quantum, financial reporting standards including mandatory audit requirement; provision for formation/operation/supervision of various types of specialized funds like collective investment schemes; guidelines related to deposit insurance scheme; framework relating to prevention & recovery from fraud; provision regarding setting up foreign subsidiary bank branches abroad subject to Bank Negara approval etc.; framework pertaining to merger & acquisition related transactions involving licenses entities under BAFIA's coverage.
Essential Questions and Answers on Banking and Financial Institutions Act in "BUSINESS»BANKING"
What is the purpose of the BAFIA?
The Banking and Financial Institutions Act (BAFIA) is Malaysia’s principal legislation covering banking and financial services. It sets out the regulatory framework for the banking and financial sector in Malaysia, providing a comprehensive legal infrastructure for safeguarding depositors and protecting consumers.
How does BAFIA promote security in banking and financial institutions?
BAFIA requires banks and financial institutions to adhere to regulations for combating money laundering, terrorism financing, market abuse, insider trading, and other activities that involve illicit behaviour or fraud. Banks and other financial institutions also must follow guidelines on customer identification procedures, record keeping, storage of documents, disclosures to customers etc.
Who regulates BAFIA?
The Bank Negara Malaysia (BNM) is responsible for regulating all matters related to BAFIA.
How often does BAFIA need to be updated?
The BNM consults with the industry periodically regarding changes to BAFIA when required. This ensures the regulations are up-to-date with advancements in technology or new risks posed by ever-evolving criminal activities.
Is there a role for Parliament in influencing future updates of BAFIA?
Yes, Parliament engages in discussions around potential updates to ensure they are appropriate and effective before they can become legally binding.
Does every bank/financial institution have to comply with BAFIA?
Yes, all banks and financial institutions operating in Malaysia are required by law to comply with applicable provisions of the Banking & Financial Institutions Act 1989 (BAFIA).
Does failure to comply with BAFIA result in a penalty?
Yes, failure to comply with any provisions of the act may lead to sanctions/penalties such as fines or imprisonment.
Final Words:
In summary BAFIA provides a robust legal framework for carrying out banking-related activities while protecting public interest through stringent regulatory oversight. Since its establishment in 1994 it has played a significant role towards achieving operational excellence among Malaysian Banks & Financial Institutions across various service products & offerings thereby helping sustain economic stability within the country.
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