What does BAFIA mean in INSTITUTES

The Banks and Financial Institutions Act (BAFIA) is a Malaysian federal law governing banking and finance in Malaysia. It provides for the regulation and supervision of activities related to banking, securities, insurance, money-market instruments, derivatives, trusts, other financial instruments and services. The Act was first enacted in 1989 and has since been amended several times to keep up with market developments.

BAFIA provides for rules on corporate governance of banks and prescribed financial institutions, authorisation procedures for establishment of such institutions, capital requirements and prudential supervision of their activities. Other key features include disclosure requirements for public listing of certain types of securities issues by banks and non-bank financial institutions; requirements on loan restructuring; as well as consumer protection rules.

BAFIA seeks to ensure that any loans granted by a bank or prescribed financial institution is done with due care and diligence so as to protect both the borrower and lender from unnecessary risks. As such, banks must conduct credit checks on borrowers before granting them loans to ensure that they meet certain criteria before extending credit facilities to them. Banks are also prohibited from granting loans against unsuitable collateral or offering incentives that may induce reckless borrowing from borrowers.

Yes, BAFIA provides various consumer protection measures which seek to protect consumers from any unethical lending practices or unfair terms imposed by lenders. These include the provision of clear information regarding loan terms and conditions prior to borrowing; allowing borrowers to negotiate terms if they find them unsuitable; providing borrowers with sufficient time frame within which to repay their loans; as well as prohibiting lenders from imposing penalties should borrower's fail to repay within the stipulated timeframe.

Under the Act, all banks participating in securities trading are required to register with Bank Negara Malaysia so as to ensure compliance with all necessary regulatory requirements. Various disclosure rules also apply where banks are issuing shares or other kinds of securities which require proper disclosure documents including financial statements, business segment reviews, risk factors etc so that investors can make informed decisions when investing in these products.

Yes, there are various penalties which may be imposed by Bank Negara Malaysia should a bank or prescribed financial institution fail to meet its obligations under the act including fines up to twenty million ringgit (RM20m) or imprisonment up two years upon conviction by a court of law for grave offences such as fraud or misrepresentation however minor offences may result in lesser punitive measures depending on severity.

In order prevent money laundering activities taking place through banking channels in Malaysia under the act all prescribed financial institutions are required put systems into place whereby suspicious transactions can be identified & reported promptly & effectively along with other strict compliance regulations on customer identification procedures & record keeping..

The act sets out principles & guidelines for sound corporate governance among banks & prescribed finanical institutions requiring them at all times exercise independent judgement when carrying out their duties while ensuring professional integrity amongst its officers taking into account interests stakeholders & customers alike.