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Malaysian Banking Law: Meaning of “Customer” in Banking Law
Case Scenario
Sarah opens a savings account with a bank in Malaysia. At the same time, another person, Amir, only takes a loan from the same bank without depositing any money. A dispute arises, and the issue is whether both Sarah and Amir are considered “customers” under banking law.
Paraphrased Explanation (Q&A Format – Simplified & Clear)
Q1: Why is it important to define who a “customer” is?
Banking law mainly governs the relationship between a bank and its customer. Therefore, to understand rights and duties (like confidentiality, duty of care, etc.), we must first know who qualifies as a customer.
Q2: Does the Financial Services Act 2013 define “customer”?
No. The Act does not provide a direct definition of the term “customer.”
Q3: What term does the Act define instead?
The Act defines “depositor”, which refers to a person who is entitled to repayment of money placed with the bank, regardless of who originally deposited it.
Q4: What is the difference between a “customer” and a “depositor”? (Simple explanation)
👉 A depositor:
Q5: Can someone be a customer without depositing money?
Yes. A person can still be a customer if they:
Amir (borrower only) is still a customer, even though he is not a depositor.
Application
✔ Customer includes:
Customer = wider category
Depositor = narrower category
Critical Analysis (Simple Understanding)
The law intentionally keeps the term “customer” broad. This ensures that all individuals dealing with banks—whether depositing money or borrowing—are protected under banking law. If the definition were limited only to depositors, borrowers and other users of banking services would be excluded from important legal protections.
Resolution of the Case Scenario
Both are customers, even though only Sarah is a depositor.
Final Exam Rule
A “customer” is a broader concept than a “depositor”; while a depositor is entitled to repayment of deposits, a customer includes any person who has a banking relationship with the bank, including borrowers and users of banking services.
Case Scenario
Sarah opens a savings account with a bank in Malaysia. At the same time, another person, Amir, only takes a loan from the same bank without depositing any money. A dispute arises, and the issue is whether both Sarah and Amir are considered “customers” under banking law.
Paraphrased Explanation (Q&A Format – Simplified & Clear)
Q1: Why is it important to define who a “customer” is?
Banking law mainly governs the relationship between a bank and its customer. Therefore, to understand rights and duties (like confidentiality, duty of care, etc.), we must first know who qualifies as a customer.
Q2: Does the Financial Services Act 2013 define “customer”?
No. The Act does not provide a direct definition of the term “customer.”
Q3: What term does the Act define instead?
The Act defines “depositor”, which refers to a person who is entitled to repayment of money placed with the bank, regardless of who originally deposited it.
Q4: What is the difference between a “customer” and a “depositor”? (Simple explanation)
👉 A depositor:
- Someone who puts money into the bank
- Has the right to get that money back
- A broader concept
- Includes anyone who has a banking relationship
- All depositors = customers
❌ Not all customers = depositors
Q5: Can someone be a customer without depositing money?
Yes. A person can still be a customer if they:
- Take a loan
- Use banking services
- Enter into financial agreements with the bank
Amir (borrower only) is still a customer, even though he is not a depositor.
Application
✔ Customer includes:
- Depositors
- Borrowers
- Account holders
- Users of banking services
- Only those entitled to repayment of deposits
Customer = wider category
Depositor = narrower category
Critical Analysis (Simple Understanding)
The law intentionally keeps the term “customer” broad. This ensures that all individuals dealing with banks—whether depositing money or borrowing—are protected under banking law. If the definition were limited only to depositors, borrowers and other users of banking services would be excluded from important legal protections.
Resolution of the Case Scenario
- Sarah (depositor) → ✔ Customer
- Amir (borrower only) → ✔ Customer
Both are customers, even though only Sarah is a depositor.
Final Exam Rule
A “customer” is a broader concept than a “depositor”; while a depositor is entitled to repayment of deposits, a customer includes any person who has a banking relationship with the bank, including borrowers and users of banking services.
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