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Malaysian Banking Law – Definite Definition of a Bank in the UK and Malaysia
General Overview
Based on all the judicial decisions, statutory provisions, and legal writings discussed earlier, there is actually no single universal or exhaustive definition of the word “bank” in either the United Kingdom or Malaysia.
Instead, the meaning of “bank” is determined by:
Definite Position in the United Kingdom
No Single Exhaustive Definition
In the UK, courts repeatedly stated that banking is difficult to define precisely because banking evolves over time and differs according to commercial and technological developments.
This principle was recognised in:
Traditional UK Definition of a Bank
The traditional judicial definition mainly comes from:
Traditional Characteristics of a Bank in UK Law
A bank generally:
Modern UK Position
Modern courts also recognise that:
Simplified Definite UK Definition
Definition
A bank in UK law is generally:
A person or institution whose main business involves accepting deposits, operating customer accounts, facilitating payment transactions, and carrying on genuine banking activities recognised commercially and legally as banking business.
Definite Position in Malaysia
Statutory Definition Under Malaysian Law
Malaysia adopts a more structured statutory approach compared to the UK.
Under section 2(1) of the repealed Banking and Financial Institutions Act 1989 and presently under the Financial Services Act 2013, a bank is defined as:
A person licensed to carry on banking business.
Definition of Banking Business in Malaysia
Under the Financial Services Act 2013, banking business includes:
Malaysian Regulatory Approach
Malaysia places strong emphasis on:
Modern Malaysian Position
Modern Malaysian banking law also recognises:
Simplified Definite Malaysian Definition
Definition
A bank in Malaysian law is generally:
A licensed financial institution that carries on banking business by accepting deposits, facilitating payments, providing finance, and conducting other authorised financial activities regulated under the Financial Services Act 2013.
Key Difference Between UK and Malaysia
United Kingdom
Malaysia
Note Form – Final Definition
United Kingdom
A bank generally:
Malaysia
A bank generally:
Critical Analysis
The absence of a universal definition demonstrates that banking constantly evolves with commercial and technological developments.
Traditional definitions focused heavily on:
Unresolved Issues
Digital Banking
Whether digital financial platforms should legally be classified as banks remains a major issue.
Declining Importance of Cheques
Cheque-related functions may no longer accurately represent modern banking systems.
FinTech Regulation
Modern financial technology companies continue to challenge traditional legal definitions of banking.
Conclusion
There is no single universal definition of “bank” in either the UK or Malaysia. However, both systems recognise that a bank generally performs deposit-taking, payment, and financing functions. The UK relies more on judicial interpretation and commercial understanding, while Malaysia adopts a more structured statutory and regulatory approach under the Financial Services Act 2013. Despite technological developments and changing financial systems, the core concept of banking remains centred on accepting money, facilitating payments, and supporting economic activity through financial intermediation.
General Overview
Based on all the judicial decisions, statutory provisions, and legal writings discussed earlier, there is actually no single universal or exhaustive definition of the word “bank” in either the United Kingdom or Malaysia.
Instead, the meaning of “bank” is determined by:
- The nature of the activities carried out,
- Statutory definitions,
- Judicial interpretations,
- Commercial understanding,
- Regulatory recognition.
Definite Position in the United Kingdom
No Single Exhaustive Definition
In the UK, courts repeatedly stated that banking is difficult to define precisely because banking evolves over time and differs according to commercial and technological developments.
This principle was recognised in:
- Bank of Chettinad Ltd of Colombo v IT Commissioners of Colombo
- Bank of New South Wales v Commonwealth
Traditional UK Definition of a Bank
The traditional judicial definition mainly comes from:
- United Dominions Trust Ltd v Kirkwood,
- Halsbury’s Laws of England,
- Dr HL Hart.
Traditional Characteristics of a Bank in UK Law
A bank generally:
- Accepts deposits from customers,
- Maintains current accounts,
- Pays cheques drawn by customers,
- Collects cheques for customers,
- Facilitates financial transactions,
- Carries on banking as its main business.
Modern UK Position
Modern courts also recognise that:
- Banking methods evolve,
- Cheques may no longer be essential,
- Digital payment systems may replace traditional cheque functions.
- The substance of financial activities,
- Deposit-taking,
- Payment services,
- Financial intermediation,
- Public and commercial recognition.
Simplified Definite UK Definition
Definition
A bank in UK law is generally:
A person or institution whose main business involves accepting deposits, operating customer accounts, facilitating payment transactions, and carrying on genuine banking activities recognised commercially and legally as banking business.
Definite Position in Malaysia
Statutory Definition Under Malaysian Law
Malaysia adopts a more structured statutory approach compared to the UK.
Under section 2(1) of the repealed Banking and Financial Institutions Act 1989 and presently under the Financial Services Act 2013, a bank is defined as:
A person licensed to carry on banking business.
Definition of Banking Business in Malaysia
Under the Financial Services Act 2013, banking business includes:
- Accepting deposits,
- Paying and collecting cheques,
- Providing finance,
- Other prescribed financial business.
Malaysian Regulatory Approach
Malaysia places strong emphasis on:
- Licensing,
- Regulatory approval,
- Supervision by Bank Negara Malaysia.
- It is licensed under Malaysian banking law,
- It carries on authorised banking business.
Modern Malaysian Position
Modern Malaysian banking law also recognises:
- Digital payment systems,
- Electronic banking,
- Financial advisory business,
- Payment instrument operations,
- Other approved financial services.
Simplified Definite Malaysian Definition
Definition
A bank in Malaysian law is generally:
A licensed financial institution that carries on banking business by accepting deposits, facilitating payments, providing finance, and conducting other authorised financial activities regulated under the Financial Services Act 2013.
Key Difference Between UK and Malaysia
United Kingdom
- Mainly based on judicial interpretation and commercial understanding.
- No single statutory definition.
- Courts focus on characteristics of banking.
Malaysia
- Mainly based on statutory and regulatory definitions.
- Strong emphasis on licensing and authorisation.
- Banking business clearly regulated by legislation.
Note Form – Final Definition
United Kingdom
A bank generally:
- Accepts deposits,
- Operates customer accounts,
- Processes payments,
- Carries on banking as its main business,
- Is recognised commercially as a banker.
Malaysia
A bank generally:
- Is licensed under the Financial Services Act 2013,
- Accepts deposits,
- Pays and collects cheques,
- Provides financing,
- Carries on authorised banking business regulated by Bank Negara Malaysia.
Critical Analysis
The absence of a universal definition demonstrates that banking constantly evolves with commercial and technological developments.
Traditional definitions focused heavily on:
- Current accounts,
- Cheque payments,
- Physical banking services.
- Internet banking,
- Mobile payments,
- Digital wallets,
- Electronic fund transfers,
- FinTech services.
Unresolved Issues
Digital Banking
Whether digital financial platforms should legally be classified as banks remains a major issue.
Declining Importance of Cheques
Cheque-related functions may no longer accurately represent modern banking systems.
FinTech Regulation
Modern financial technology companies continue to challenge traditional legal definitions of banking.
Conclusion
There is no single universal definition of “bank” in either the UK or Malaysia. However, both systems recognise that a bank generally performs deposit-taking, payment, and financing functions. The UK relies more on judicial interpretation and commercial understanding, while Malaysia adopts a more structured statutory and regulatory approach under the Financial Services Act 2013. Despite technological developments and changing financial systems, the core concept of banking remains centred on accepting money, facilitating payments, and supporting economic activity through financial intermediation.
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