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Malaysian Banking Law: Definition of a “Bank” under the Financial Services Act 2013
Direct Answer
Under the Financial Services Act 2013:
👉 There is NO single section that directly defines the word “bank.”
How the Act Defines a Bank (Step-by-Step Understanding)
1. Section 2(1): Key Definitions
Instead of defining “bank” directly, the Act defines:
👉 “licensed bank”
= a person licensed under section 10 to carry on banking business
2. Section 10: Licensing Requirement
👉 Section 10 states:
A person must obtain a licence to carry on banking business
3. Section 2(1): “Banking business”
The Act defines banking business as:
Put It Together (Very Important)
👉 A “bank” under the Financial Services Act 2013 means:
✔ A licensed bank
✔ Which is authorised under section 10
✔ To carry on banking business
Simplified Definition (Exam Ready)
A bank under the Financial Services Act 2013 is a person licensed under section 10 to carry on banking business as defined in section 2(1).
Important Insight
👉 The Act uses an indirect definition approach:
Link to Your Previous Cases
This matches what courts said:
✔ “Bank” = licensed + full banking functions
Final Exam Rule
Under the Financial Services Act 2013, a bank is not expressly defined but is understood as a licensed person under section 10 authorised to carry on banking business as defined in section 2(1).
Direct Answer
Under the Financial Services Act 2013:
👉 There is NO single section that directly defines the word “bank.”
How the Act Defines a Bank (Step-by-Step Understanding)
1. Section 2(1): Key Definitions
Instead of defining “bank” directly, the Act defines:
👉 “licensed bank”
= a person licensed under section 10 to carry on banking business
2. Section 10: Licensing Requirement
👉 Section 10 states:
A person must obtain a licence to carry on banking business
3. Section 2(1): “Banking business”
The Act defines banking business as:
- Accepting deposits
- Paying/collecting cheques
- Providing finance
- Other prescribed activities
Put It Together (Very Important)
👉 A “bank” under the Financial Services Act 2013 means:
✔ A licensed bank
✔ Which is authorised under section 10
✔ To carry on banking business
Simplified Definition (Exam Ready)
A bank under the Financial Services Act 2013 is a person licensed under section 10 to carry on banking business as defined in section 2(1).
Important Insight
👉 The Act uses an indirect definition approach:
- It does NOT say “bank = …”
- Instead, it defines:
- banking business
- licensed bank
Link to Your Previous Cases
This matches what courts said:
- Sabah Development Bank Bhd v SKBS (Sabah) Sdn Bhd
→ Not every lender is a bank - Light Style Sdn Bhd v KFH Ijarah House (Malaysia) Sdn Bhd
→ Financing alone ≠ banking
✔ “Bank” = licensed + full banking functions
Final Exam Rule
Under the Financial Services Act 2013, a bank is not expressly defined but is understood as a licensed person under section 10 authorised to carry on banking business as defined in section 2(1).
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