Malaysian Banking Law – Judicial Approaches in Determining Customer Relationships


Case Scenario
Mr. Rahman approached a bank to cash a cheque issued in the name of a trading business he previously operated. During the discussion, he informed the bank officer that he intended to open an account using the proceeds from the cheque once the cheque had been successfully collected.
The bank agreed to assist him only after verifying that the cheque would be honoured upon presentation. Before the cheque was collected and before any account was formally opened, a legal dispute later arose concerning whether Mr. Rahman had already become a customer of the bank at that particular moment.
Mr. Rahman argued that:

• he had already initiated a banking relationship with the bank;
• the bank had begun processing the cheque; and
• he intended to open an account with the bank immediately after collection.

However, the bank contended that:

• no account had yet been opened;
• the cheque had not yet been collected;
• the relationship remained preliminary in nature; and
• no banker-customer relationship had yet arisen.

The dispute closely resembles the principles established in Tate v Wilts and Dorset Bank together with authorities such as Great Western Railway Co v London and County Banking Co Ltd, Robinson v Midland Bank Ltd, Commissioners of Taxation v English, Scottish and Australian Bank Ltd, Ladbroke & Co v Todd, and Barclays Bank Ltd v Okenarhe.
Applying these principles, the court would likely conclude that Mr. Rahman was not yet a customer at that particular moment because the account relationship had not been fully established. However, the court would recognise that he was on the verge of becoming a customer once the cheque was collected and the account relationship formally commenced.
This scenario demonstrates that mere intention to establish a banking relationship is insufficient unless the account relationship has actually materialised.


Meaning of “Customer” in Banking Law
The concept of a “customer” forms one of the most important foundations of banking law because the existence of a banker-customer relationship determines the legal obligations owed by a bank.
Generally, a customer refers to a person who maintains an account with a bank or engages the bank to provide banking services. However, neither Malaysian nor UK banking legislation provides a complete statutory definition of the term.
Consequently, courts have developed the legal meaning of “customer” through judicial interpretation and case law.
Once customer status exists, banks owe important obligations, including:

• the duty of confidentiality;
• the duty to honour valid payment instructions;
• the duty to exercise reasonable care and skill; and
• compliance with banking and financial regulations.

Because these obligations are substantial, courts carefully determine the exact point at which the banker-customer relationship begins.


Position Under Malaysian Law
Under Malaysian law, no comprehensive statutory definition of “customer” exists.
The Financial Services Act 2013 defines a “depositor” as a person entitled to repayment of a deposit, whether the deposit was made personally or by another person. However, the Act does not define the broader concept of “customer.”
This means that the person legally entitled to repayment of funds is recognised as the depositor even if another person physically deposited the money.
For example:

• a child becomes the depositor when parents place money into the child’s account; and
• an employee becomes the depositor when salary is deposited by an employer.

Likewise, the Bills of Exchange Act 1949 regulates negotiable instruments such as bills and cheques but does not define customer status.
Malaysian courts therefore continue to rely heavily upon English common law authorities.


Position Under UK Law
The position under UK law is similar because no statutory definition of “customer” exists.
Neither the Bills of Exchange Act 1882 nor the Cheques Act 1957 defines the term.
English courts therefore developed judicial principles to determine:

• who qualifies as a customer; and
• when the banker-customer relationship begins.

The principal authorities include:

• Great Western Railway Co v London and County Banking Co Ltd;
• Robinson v Midland Bank Ltd;
• Commissioners of Taxation v English, Scottish and Australian Bank Ltd;
• Ladbroke & Co v Todd;
• Barclays Bank Ltd v Okenarhe; and
• Tate v Wilts and Dorset Bank.

Great Western Railway Principle
In Great Western Railway Co v London and County Banking Co Ltd, the court held that occasional banking services alone are insufficient to create customer status.
The case involved a man who repeatedly exchanged crossed cheques for cash at a bank where he maintained no account. Despite the repeated transactions, the House of Lords held that he was not a customer because no recognised account relationship existed.
Lord Davey explained that:
“… there must be some sort of account, either a deposit or a current account or some similar relation, to make a man a customer of a banker.”
This case established the principle that:

• casual banking dealings are insufficient; and
• an account relationship is essential.

Robinson v Midland Bank Ltd Principle
The principles established in Great Western Railway Co v London and County Banking Co Ltd were reinforced in Robinson v Midland Bank Ltd.
The Court of Appeal explained that the chief criterion for customer status is the existence of an account through which banking transactions are conducted.
The court further held that:

• casual dealings unrelated to ordinary banking business do not create customer status; and
• occasional services alone are insufficient.

Commissioners of Taxation Principle
A further development occurred in Commissioners of Taxation v English, Scottish and Australian Bank Ltd.
The House of Lords clarified that duration of the relationship is not essential. A person may become a customer immediately once an account is opened and money is accepted into that account.
The court stated:
“The word ‘customer’ signifies a relationship in which duration is not of the essence.”
This shifted judicial focus away from the length of the relationship toward the existence of an account relationship itself.


Ladbroke & Co v Todd Principle
In Ladbroke & Co v Todd, the court held that a person may become a customer even before a cheque has cleared.
The court explained that:

• it is unnecessary for the customer to have withdrawn money; and
• it is unnecessary for the customer to be immediately entitled to draw against the account.

The crucial factor was that the bank had already accepted the account relationship and accepted the cheque for collection.


Barclays Bank Ltd v Okenarhe Principle
In Barclays Bank Ltd v Okenarhe, the bank cashed a cheque for a person who had no account but had been introduced by an existing customer.
The court held that the individual was not a customer because the bank merely performed a casual service for him.
The case reinforced the principle that:

• customer introduction alone is insufficient; and
• casual banking assistance without an account relationship does not establish customer status.

Tate v Wilts and Dorset Bank Principle
A further clarification arose in Tate v Wilts and Dorset Bank.
Facts
A man requested the bank to cash a cheque drawn in favour of a person under whose name he had traded. The bank agreed to do so only after confirming that the cheque would be honoured.
The man also informed the bank that he intended to open an account using the cheque proceeds once collection was completed.
Held
The court held that the man was not yet a customer at that moment because no account relationship had yet been established.
However, the court recognised that he would become a customer once:

• the cheque was collected; and
• the banking relationship formally commenced.

Legal Analysis of the Cases
When these authorities are read together, they establish the modern judicial principles governing customer status.
Great Western Railway and Robinson Cases
These cases established that:

• casual services alone are insufficient; and
• an account relationship is essential.

Commissioners of Taxation and Ladbroke Cases
These cases expanded customer recognition by holding that:

• duration of the relationship is irrelevant;
• customer status may arise immediately; and
• actual withdrawal of money is unnecessary.

Barclays Bank Ltd v Okenarhe Case
This case reaffirmed that:

• casual services alone do not create customer status; and
• customer introduction is insufficient without an account relationship.

Tate v Wilts and Dorset Bank Case
This case clarified that:

• intention to open an account is insufficient by itself; and
• customer status only arises once the banking relationship formally materialises.

Together, the cases establish the following principles:

1. A person does not become a customer merely because a bank performs casual services.
2. Some form of recognised account relationship is necessary.
3. Duration of the relationship is irrelevant.
4. Customer status may arise immediately once the account relationship is accepted.
5. Mere intention to open an account is insufficient without an actual banking relationship.

Critical Analysis
The combined judicial approach reflects a balance between:

• protecting banks from unlimited liability toward non-customers; and
• protecting genuine account holders.

The more modern approach adopted in Commissioners of Taxation v English, Scottish and Australian Bank Ltd and Ladbroke & Co v Todd reflects commercial realities because modern banking relationships may arise instantly through:

• online banking;
• electronic account opening;
• fintech platforms; and
• mobile banking applications.

However, cases such as Great Western Railway Co v London and County Banking Co Ltd, Barclays Bank Ltd v Okenarhe, and Tate v Wilts and Dorset Bank remain important because they prevent banks from becoming automatically liable to every individual receiving occasional banking assistance.


Practical Importance
The banker-customer relationship remains highly significant because banks owe major legal duties once customer status arises.
Examples include:

• a person opening an account for cheque collection becomes a customer immediately;
• a depositor becomes entitled to repayment once funds are accepted;
• a business maintaining a current account clearly qualifies as a customer; while
• a person merely receiving casual cheque-cashing services without an account remains a non-customer.

Banks therefore require formal account-opening procedures to establish legal certainty.


Solutions to the Case Scenario
Several measures may reduce disputes similar to Mr. Rahman’s situation.
1. Clear Banking Procedures
Banks should clearly explain when customer status officially begins.
2. Written Clarification During Negotiations
Financial institutions should provide written clarification regarding:

• account opening;
• cheque collection; and
• customer rights during preliminary dealings.

3. Legislative Reform
Malaysia may consider introducing a statutory definition of “customer.”
4. Consumer Education
Banks and regulators should educate consumers regarding:

• customer status;
• banking obligations; and
• the legal significance of account relationships.

5. Modern Digital Banking Regulation
Regulators should establish clearer legal rules concerning fintech and digital banking users.
Had these measures been implemented, Mr. Rahman would have clearly understood that intention alone was insufficient to establish customer status before the account relationship formally commenced.


Conclusion
The banker-customer relationship forms the legal foundation of banking law because it determines the obligations owed between banks and individuals.
Although Malaysian and UK statutes do not define “customer,” courts have developed detailed judicial principles through case law.
Cases such as Great Western Railway Co v London and County Banking Co Ltd, Robinson v Midland Bank Ltd, Commissioners of Taxation v English, Scottish and Australian Bank Ltd, Ladbroke & Co v Todd, Barclays Bank Ltd v Okenarhe, and Tate v Wilts and Dorset Bank collectively establish that:

• casual services alone are insufficient;
• an account relationship is essential;
• duration is irrelevant; and
• intention alone does not create customer status unless the banking relationship formally arises.

These principles continue to shape modern banking law despite ongoing technological developments in digital finance and fintech services.


References (APA Style)
Barclays Bank Ltd v Okenarhe. [1966] 2 Lloyds Rep 87.
Bills of Exchange Act 1882.
Bills of Exchange Act 1949.
Cheques Act 1957.
Commissioners of Taxation v English, Scottish and Australian Bank Ltd. [1920] AC 683.
Financial Services Act 2013.
Great Western Railway Co v London and County Banking Co Ltd. [1901] AC 414.
Ladbroke & Co v Todd. (1914) 19 Com Cas 256.
Robinson v Midland Bank Ltd. (1925) 41 TLR 402.
Tate v Wilts and Dorset Bank. (1899) 1 Legal (Decisions) Affecting Bankers 286.

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Malaysian Banking Law – Rights, Duties and Obligations in the Banker-Customer Relationship


Case Scenario
Agro Livestock Sdn Bhd had maintained several banking facilities with National Commercial Bank for many years. The facilities included:

• overdraft facilities;
• letters of credit;
• trust receipts; and
• banker’s guarantees.

Due to serious financial losses suffered in its livestock business, the company failed to service the monthly interest payments required under the restructuring agreement entered into with the bank. Although the bank initially agreed to restructure the facilities, it later imposed stricter conditions requiring the company to deposit equivalent funds before further credit facilities could be issued.
The company alleged that the bank had breached the restructuring agreement by unilaterally imposing additional conditions. The bank, however, argued that:

• the company had failed to fulfil the conditions precedent under the restructuring agreement;
• monthly interest obligations had not been paid; and
• the bank was legally entitled to suspend further drawdowns because the borrower had breached its obligations.

The dispute closely resembles the principles established in Bekalan Sains P & C Sdn Bhd v Bank Bumiputra Malaysia Bhd together with earlier authorities governing banker-customer relationships.
Applying these principles, the court would likely conclude that the bank was entitled to withhold further banking facilities because the borrower had breached its contractual obligation to pay interest under the restructuring agreement.
This scenario illustrates that once a banker-customer relationship exists, both parties become subject to corresponding rights, duties, and obligations.


Banker-Customer Relationship: Rights, Duties and Obligations
The banker-customer relationship forms the legal foundation of banking law because it governs the contractual and fiduciary obligations owed between financial institutions and their customers.
Once the relationship arises, both parties acquire important legal rights and duties.
Duties Owed by Banks
Banks generally owe customers obligations including:

• the duty of confidentiality;
• the duty to honour valid payment instructions;
• the duty to exercise reasonable care and skill;
• the duty to act in accordance with contractual terms; and
• compliance with banking and financial regulations.

Duties Owed by Customers
Customers and borrowers similarly owe obligations to banks, including:

• repayment of loans and credit facilities;
• payment of interest;
• compliance with facility agreements; and
• fulfilment of contractual conditions precedent.

Where customers breach these obligations, banks may lawfully:

• suspend further drawdowns;
• recall facilities; or
• impose additional conditions to protect their financial interests.

Position Under Malaysian Law
Under Malaysian law, the Financial Services Act 2013 does not comprehensively define “customer,” although it defines a “depositor” as a person entitled to repayment of deposited funds.
Likewise, the Bills of Exchange Act 1949 regulates negotiable instruments but does not define customer status.
Consequently, Malaysian courts rely heavily upon:

• English common law authorities; and
• local judicial precedents

to determine:

• who qualifies as a customer; and
• the legal consequences arising from the banker-customer relationship.

Judicial Development of Customer Status
The courts gradually developed the meaning of “customer” through several important authorities.


Great Western Railway Principle
In Great Western Railway Co v London and County Banking Co Ltd, the court held that casual banking services alone are insufficient to establish customer status.
The House of Lords explained that some form of recognised account relationship is necessary before a person becomes a customer.
This case established that:

• casual services alone are insufficient; and
• an account relationship is generally essential.

Robinson v Midland Bank Ltd Principle
In Robinson v Midland Bank Ltd, the court reinforced that the chief criterion for customer status is the existence of an account through which banking transactions are conducted.
The court further clarified that casual dealings unrelated to ordinary banking business do not create customer status.


Commissioners of Taxation Principle
In Commissioners of Taxation v English, Scottish and Australian Bank Ltd, the House of Lords held that duration of the relationship is not essential.
Customer status may arise immediately once:

• an account is opened; and
• money is accepted into the account.

Ladbroke & Co v Todd Principle
In Ladbroke & Co v Todd, the court recognised that customer status may arise even before a cheque has cleared.
The important factor was that the bank had accepted the account relationship and accepted the cheque for collection.


Barclays Bank Ltd v Okenarhe Principle
In Barclays Bank Ltd v Okenarhe, the court held that a person is not a customer where the bank merely performs a casual service for him without any recognised account relationship.


Tate v Wilts and Dorset Bank Principle
In Tate v Wilts and Dorset Bank, the court clarified that mere intention to open an account is insufficient to establish customer status.
The banking relationship must formally materialise before customer status arises.


Woods v Martins Bank Ltd Principle
In Woods v Martins Bank Ltd, the court recognised that contractual dealings and accepted banking instructions may establish customer status even before formal account opening.


Oriental Bank of Malaya Principle
In Oriental Bank of Malaya v Rubber Industry (Replanting Board), the court held that a fraudster who opened an account using forged documents nevertheless became a customer once:

• the account was opened; and
• the cheque was accepted for collection.

The case demonstrated that customer status depends upon the objective existence of the banking relationship itself.


Importers Co Ltd Principle
In Importers Co Ltd v Westminster Bank Ltd, the court held that one bank may become the customer of another bank where regular cheque-clearing services are performed between them.
The case expanded customer status beyond ordinary account holders to include interbank banking relationships.


Kehar Singh Principle
In Kehar Singh a/l Jasa Singh v The Standard Chartered Bank, the court recognised that even a “walk-in” customer who purchased a bank draft without maintaining an account may still be owed a duty of care by the bank.
The court apportioned liability between:

• the bank; and
• the customer

because both parties had acted negligently.
This case demonstrated the courts’ willingness to extend banking duties beyond traditional account holders.


Bekalan Sains P & C Sdn Bhd v Bank Bumiputra Malaysia Bhd Principle
An important Malaysian authority concerning the rights and obligations arising from the banker-customer relationship is Bekalan Sains P & C Sdn Bhd v Bank Bumiputra Malaysia Bhd.
Facts
Bekalan Sains P & C Sdn Bhd operated a cattle business and had obtained various banking facilities from Bank Bumiputra Malaysia Bhd, including:

• overdraft facilities;
• letters of credit;
• trust receipts; and
• banker’s guarantees.

Under the banking agreements:

• the bank reserved the right to amend conditions;
• additional conditions could be imposed by written notice; and
• failure to pay principal or interest constituted an event of default.

After suffering major business losses, the company informed the bank that it could no longer settle outstanding trust receipts and requested restructuring of the facilities.
The bank initially agreed to restructure the facilities amounting to RM8.8 million. However, it later imposed additional conditions, including:

• a “1:1” condition requiring equivalent deposits before issuance of letters of credit; and
• monthly payments of RM15,000 toward interest servicing.

The company argued that:

• the restructuring agreement constituted a concluded contract; and
• the bank had breached the agreement by imposing additional conditions.

The bank argued that:

• the company failed to comply with conditions precedent;
• the monthly RM15,000 interest payments had not been made; and
• the bank therefore had the right to suspend further credit facilities.

Held
The Court of Appeal dismissed the company’s appeal.
The court held that:

1. the restructuring agreement was subject to conditions precedent which had not been fulfilled;
2. the borrower had failed to pay the agreed monthly interest obligations; and
3. it was settled law that a bank may withhold further drawdowns where the borrower breaches obligations to pay interest.

The court further observed that:

• the borrower misunderstood the restructuring agreement;
• merely accepting the letter of offer was insufficient; and
• the borrower was also required to execute supplementary agreements and fulfil payment obligations.

Additionally, the court held that the borrower failed to mitigate its losses.


Legal Analysis of Bekalan Sains Case
The decision in Bekalan Sains P & C Sdn Bhd v Bank Bumiputra Malaysia Bhd is significant because it highlights the reciprocal obligations existing within the banker-customer relationship.
Earlier authorities focused primarily upon:

• identifying customer status; and
• determining when the banker-customer relationship begins.

However, Bekalan Sains demonstrates that once the relationship exists:

• customers and borrowers become contractually bound by banking obligations; and
• banks possess corresponding rights to protect their financial interests.

The case confirms that:

• payment of interest is a fundamental banking obligation;
• breach of repayment obligations entitles banks to suspend facilities; and
• restructuring agreements remain subject to contractual conditions precedent.

The decision also illustrates judicial recognition that banks must retain commercial discretion in managing credit risks and protecting financial stability.


Combined Judicial Principles
When all the authorities are read together, the following principles emerge:

1. Casual banking services alone are generally insufficient.
2. Some form of recognised banking relationship is usually necessary.
3. Duration of the relationship is irrelevant.
4. Customer status may arise immediately once:
   • an account is opened;
   • banking instructions are accepted;
   • contractual arrangements arise; or
   • funds are accepted for collection.
5. One bank may become the customer of another bank.
6. Walk-in customers may still be owed duties of care.
7. Once the banker-customer relationship exists:
   • banks owe legal duties to customers; and
   • customers owe repayment and contractual obligations to banks.
8. Banks may lawfully withhold further drawdowns where borrowers breach repayment obligations.

Critical Analysis
The judicial development of customer status demonstrates increasing commercial flexibility.
Earlier authorities focused narrowly upon account relationships. Later cases expanded customer recognition to include:

• contractual banking arrangements;
• interbank relationships; and
• temporary banking transactions.

At the same time, cases such as Bekalan Sains P & C Sdn Bhd v Bank Bumiputra Malaysia Bhd emphasise that the banker-customer relationship is reciprocal in nature.
Customers are not merely entitled to protection; they are also required to:

• comply with contractual obligations;
• service loan repayments; and
• fulfil agreed banking conditions.

The courts therefore seek to balance:

• customer protection;
• banking stability; and
• commercial practicality.

Practical Importance
The banker-customer relationship remains highly significant because substantial legal rights and obligations arise once the relationship exists.
Examples include:

• a customer opening an account immediately acquires banking rights;
• banks owe duties of confidentiality and care;
• borrowers must comply with repayment obligations;
• banks may suspend facilities where defaults occur; and
• even temporary or walk-in customers may receive limited legal protection.

Banks therefore require:

• proper account-opening procedures;
• strong contractual documentation; and
• effective credit risk management systems.

Solutions to the Case Scenario
Several measures may reduce disputes involving banker-customer obligations.
1. Clear Contractual Documentation
Banks should clearly explain:

• repayment obligations;
• restructuring conditions; and
• consequences of default.

2. Transparent Banking Communication
Financial institutions should ensure customers fully understand:

• conditions precedent;
• interest obligations; and
• suspension rights.

3. Strong Credit Monitoring
Banks should continuously monitor borrower compliance with restructuring agreements.
4. Consumer Education
Customers should be educated regarding:

• banking obligations;
• loan repayment responsibilities; and
• legal consequences of default.

5. Legislative Reform
Malaysia may consider introducing clearer statutory provisions governing banker-customer obligations.
Had these measures been properly implemented, many disputes involving restructuring and suspension of facilities could have been avoided.


Conclusion
The banker-customer relationship forms the legal foundation of banking law because it determines the rights, duties, and obligations owed between banks and customers.
Although Malaysian and UK legislation do not comprehensively define “customer,” courts have developed extensive judicial principles through case law.
Cases such as Great Western Railway Co v London and County Banking Co Ltd, Woods v Martins Bank Ltd, Importers Co Ltd v Westminster Bank Ltd, Kehar Singh a/l Jasa Singh v The Standard Chartered Bank, and Bekalan Sains P & C Sdn Bhd v Bank Bumiputra Malaysia Bhd collectively establish that:

• customer status depends upon genuine banking relationships;
• contractual obligations are reciprocal;
• banks owe duties to customers; and
• customers must comply with repayment and contractual obligations.

These principles continue to shape modern banking law in both traditional and digital banking environments.

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Malaysian Banking Law – Judicial and Contractual Recognition of Customer Status


Case Scenario
Mr. Farid discovered an “Account Payee” cheque issued in favour of a trading company. He approached a bank branch and requested that an account be opened under the company’s name. In support of the application, he produced identification documents and registration certificates which later turned out to be forged.
After the bank opened the account, the cheque was deposited into it. Once the cheque was successfully collected, Mr. Farid withdrew the proceeds and disappeared. A dispute subsequently arose concerning whether he qualified as a “customer” of the bank despite:

• the fraudulent nature of the documents;
• the short duration of the relationship; and
• the dishonest circumstances surrounding the account opening.

The bank argued that:

• an account had formally been opened;
• the cheque had been accepted for collection; and
• the banker-customer relationship had therefore arisen.

The dispute closely resembles the principles established in Oriental Bank of Malaya v Rubber Industry (Replanting Board) together with earlier authorities such as Great Western Railway Co v London and County Banking Co Ltd, Robinson v Midland Bank Ltd, Commissioners of Taxation v English, Scottish and Australian Bank Ltd, Ladbroke & Co v Todd, Barclays Bank Ltd v Okenarhe, Tate v Wilts and Dorset Bank, and Woods v Martins Bank Ltd.
Applying these principles, the court would likely conclude that Mr. Farid became a customer once the account was opened and the cheque was accepted for collection, notwithstanding the fraudulent circumstances surrounding the transaction.
This scenario demonstrates that customer status may arise once a banking relationship is formally established, even where the relationship was induced through fraud.


Meaning of “Customer” in Banking Law
The banker-customer relationship forms the legal foundation of banking law because it determines the rights, obligations, and liabilities owed between financial institutions and individuals.
Generally, a customer refers to a person who maintains an account with a bank or engages the bank to provide banking services. However, neither Malaysian nor UK legislation provides a complete statutory definition of “customer.”
Consequently, courts have developed the meaning of the term through judicial interpretation.
Once customer status exists, the bank owes important legal obligations, including:

• the duty of confidentiality;
• the duty to honour valid payment instructions;
• the duty to exercise reasonable care and skill; and
• compliance with statutory banking obligations.

Because these duties are significant, courts carefully determine the exact moment at which the banker-customer relationship arises.


Position Under Malaysian Law
Under Malaysian law, no comprehensive statutory definition of “customer” exists.
The Financial Services Act 2013 defines a “depositor” as a person entitled to repayment of a deposit, whether the deposit was made personally or by another person. However, the Act does not define the broader concept of “customer.”
This means that the person legally entitled to repayment of deposited funds is regarded as the depositor even if another person physically deposited the money.
Similarly, the Bills of Exchange Act 1949 regulates negotiable instruments such as cheques and bills of exchange but does not define customer status.
Malaysian courts therefore rely heavily upon English common law authorities together with local judicial precedents.


Position Under UK Law
The position in the United Kingdom is similar because there is also no statutory definition of “customer.”
Neither the Bills of Exchange Act 1882 nor the Cheques Act 1957 defines the term.
English courts therefore developed judicial principles to determine:

• who qualifies as a customer; and
• when the banker-customer relationship arises.

The principal authorities include:

• Great Western Railway Co v London and County Banking Co Ltd;
• Robinson v Midland Bank Ltd;
• Commissioners of Taxation v English, Scottish and Australian Bank Ltd;
• Ladbroke & Co v Todd;
• Barclays Bank Ltd v Okenarhe;
• Tate v Wilts and Dorset Bank; and
• Woods v Martins Bank Ltd.

Great Western Railway Principle
In Great Western Railway Co v London and County Banking Co Ltd, the court established that casual banking services alone are insufficient to create customer status.
The House of Lords held that some form of account or recognised banking relationship is necessary before a person becomes a customer.


Robinson v Midland Bank Ltd Principle
In Robinson v Midland Bank Ltd, the Court of Appeal reinforced that the chief criterion for customer status is the existence of an account through which banking transactions are conducted.
The court clarified that casual dealings unrelated to ordinary banking business do not establish customer status.


Commissioners of Taxation Principle
In Commissioners of Taxation v English, Scottish and Australian Bank Ltd, the House of Lords held that duration of the relationship is not essential.
Customer status may arise immediately once:

• an account is opened; and
• money is accepted into the account.

Ladbroke & Co v Todd Principle
In Ladbroke & Co v Todd, the court held that a person may become a customer even before a cheque clears.
Actual withdrawal of money or immediate access to funds is unnecessary once the bank accepts the account relationship.


Barclays Bank Ltd v Okenarhe Principle
In Barclays Bank Ltd v Okenarhe, the court held that a person is not a customer where the bank merely performs a casual service for him without any recognised account relationship.


Tate v Wilts and Dorset Bank Principle
In Tate v Wilts and Dorset Bank, the court clarified that mere intention to open an account is insufficient.
Customer status only arises once the banking relationship formally materialises.


Woods v Martins Bank Ltd Principle
In Woods v Martins Bank Ltd, the court recognised that customer status may arise through contractual dealings even before formal account opening.
The court held that:

• acceptance of banking instructions; and
• the existence of a contractual relationship

may themselves establish the banker-customer relationship.


Oriental Bank of Malaya v Rubber Industry (Replanting Board) Principle
A significant Malaysian authority concerning customer status is Oriental Bank of Malaya v Rubber Industry (Replanting Board).
Facts
The Rubber Industry (Replanting Board) issued an “Account Payee” cheque in favour of Kok Ann Rubber Estate and sent it by post. The cheque somehow fell into the possession of Lee Man Choi.
Lee Man Choi approached the Kuala Lumpur branch of the Central Bank of Malaya and requested that an account be opened in the name of Kok Ann Rubber Estate. To support the application, he produced:

• an identity card; and
• a duplicate registration certificate

which were later discovered to be forged.
The bank opened the account, accepted the cheque for deposit, collected the proceeds, and allowed Lee Man Choi to withdraw the money before he disappeared.
One of the legal issues before the court was whether Lee Man Choi qualified as a “customer” within the meaning of section 82 of the Bills of Exchange Act 1949 so that the bank could rely upon statutory protection.
Held
The court held that Lee Man Choi was indeed a customer of the bank.
In reaching its decision, the court referred to:

• Ladbroke & Co v Todd; and
• Commissioners of Taxation v English, Scottish and Australian Bank Ltd.

The court recognised that:

• the account had formally been opened;
• the cheque had been accepted for collection; and
• the banking relationship had already arisen,

even though the relationship was induced through fraud.


Legal Analysis of Oriental Bank of Malaya Case
The decision in Oriental Bank of Malaya v Rubber Industry (Replanting Board) is significant because it demonstrates that customer status depends primarily upon the existence of the banking relationship itself rather than the honesty or legitimacy of the customer’s conduct.
The case extended earlier principles established in:

• Commissioners of Taxation v English, Scottish and Australian Bank Ltd; and
• Ladbroke & Co v Todd

by recognising that customer status may arise immediately once:

• an account is opened; and
• a cheque is accepted for collection.

Importantly, the court did not deny customer status merely because:

• the account was fraudulently obtained; or
• forged documents had been used.

The decision therefore illustrates that the legal existence of the banker-customer relationship is determined objectively by the banking arrangements created between the parties.


Combined Judicial Principles
When all the authorities are read together, the following principles emerge:

1. Casual banking services alone are insufficient.
2. Some form of recognised banking relationship is necessary.
3. Duration of the relationship is irrelevant.
4. Customer status may arise immediately once:
   • an account is opened;
   • banking instructions are accepted; or
   • funds are accepted for collection.
5. Contractual arrangements may establish customer status even before formal account opening.
6. Customer status may still arise even where the relationship was induced through fraud.

Critical Analysis
The judicial development of customer status demonstrates increasing commercial flexibility.
Earlier authorities focused heavily upon the existence of a formal account relationship. However, later cases such as Woods v Martins Bank Ltd and Oriental Bank of Malaya v Rubber Industry (Replanting Board) recognised that:

• contractual arrangements;
• accepted banking instructions; and
• cheque collection activities

may themselves establish the banker-customer relationship.
This modern approach reflects commercial realities because banking relationships today may arise rapidly through:

• digital banking;
• online account opening;
• electronic fund transfers; and
• fintech platforms.

However, the expansion of customer recognition also increases risks of banking fraud and financial abuse.


Practical Importance
The banker-customer relationship remains highly significant because banks owe substantial legal duties once customer status arises.
Examples include:

• a person depositing funds into a newly opened account immediately becomes a customer;
• contractual banking arrangements may create customer status before formal account opening;
• a business maintaining a current account clearly qualifies as a customer; while
• a person receiving only casual banking assistance without an account remains a non-customer.

Banks therefore require strict account-opening procedures and identity verification measures.


Solutions to the Case Scenario
Several measures may reduce disputes and fraudulent situations similar to Mr. Farid’s case.
1. Enhanced Verification Procedures
Banks should strengthen identity verification and document authentication procedures during account opening.
2. Clear Banking Documentation
Financial institutions should clearly document when customer status officially begins.
3. Consumer and Staff Education
Banks should educate employees regarding:

• fraudulent account-opening risks;
• customer verification obligations; and
• banking duties during cheque collection.

4. Legislative Reform
Malaysia may consider introducing a statutory definition of “customer.”
5. Digital Banking Regulation
Regulators should establish stronger legal frameworks governing online account opening and fintech relationships.
Had these measures been implemented effectively, the fraudulent banking relationship involving Mr. Farid might have been detected earlier.


Conclusion
The banker-customer relationship forms the legal foundation of banking law because it determines the obligations owed between banks and individuals.
Although Malaysian and UK statutes do not provide a complete statutory definition of “customer,” courts have developed detailed judicial principles through case law.
Cases such as Great Western Railway Co v London and County Banking Co Ltd, Robinson v Midland Bank Ltd, Commissioners of Taxation v English, Scottish and Australian Bank Ltd, Ladbroke & Co v Todd, Barclays Bank Ltd v Okenarhe, Tate v Wilts and Dorset Bank, Woods v Martins Bank Ltd, and Oriental Bank of Malaya v Rubber Industry (Replanting Board) collectively establish that:

• casual services alone are insufficient;
• duration is irrelevant;
• contractual arrangements may establish customer status; and
• customer status may arise immediately once the banking relationship is objectively created, even where fraud is involved.

These principles continue to influence modern banking law despite ongoing technological developments in digital finance and fintech services.

​

Malaysian Banking Law – Contractual Formation of the Banker-Customer Relationship


Case Scenario
Mr. Faiz was introduced to a bank manager by one of the bank’s existing clients. During their discussions, the bank manager advised him regarding investment opportunities and proposed several financial arrangements. Following the discussion, the manager instructed Mr. Faiz to sign a letter authorising the bank:

• to collect money from a third party investment account;
• to transfer part of the proceeds to a business company; and
• to retain the remaining balance according to his future instructions.

Although no formal account had yet been opened at the bank, the bank immediately began acting on the instructions contained in the letter. Approximately three weeks later, Mr. Faiz formally opened a banking account with the institution.
Subsequently, a dispute arose concerning whether the banker-customer relationship had already existed before the formal account opening date.
Mr. Faiz argued that:

• the bank had already accepted his instructions;
• the bank had begun acting on his financial arrangements; and
• a contractual banking relationship had already arisen.

The bank, however, contended that:

• no formal account existed at the relevant time;
• negotiations were still preliminary; and
• customer status could only arise upon formal account opening.

The dispute closely resembles the principles established in Woods v Martins Bank Ltd together with authorities such as Great Western Railway Co v London and County Banking Co Ltd, Robinson v Midland Bank Ltd, Commissioners of Taxation v English, Scottish and Australian Bank Ltd, Ladbroke & Co v Todd, Barclays Bank Ltd v Okenarhe, and Tate v Wilts and Dorset Bank.
Applying these principles, the court would likely conclude that the banker-customer relationship existed from the moment the bank accepted and acted upon the instructions contained in the letter, even though a formal account was opened only several weeks later.
This scenario demonstrates that the existence of a contractual relationship and acceptance of banking instructions may establish customer status even before formal account opening.


Meaning of “Customer” in Banking Law
The banker-customer relationship forms the legal foundation of banking law because it determines the rights, duties, and liabilities owed between banks and individuals.
Generally, a customer refers to a person who maintains an account with a bank or engages the bank to perform banking services. However, neither Malaysian nor UK legislation provides a complete statutory definition of “customer.”
Consequently, the courts have developed the legal meaning of customer through judicial interpretation.
Once customer status exists, the bank owes significant legal obligations, including:

• the duty of confidentiality;
• the duty to honour valid payment instructions;
• the duty to exercise reasonable care and skill; and
• compliance with banking regulations and financial laws.

Because these duties are substantial, courts carefully determine the exact moment when the banker-customer relationship begins.


Position Under Malaysian Law
Under Malaysian law, no complete statutory definition of “customer” exists.
The Financial Services Act 2013 defines a “depositor” as a person entitled to repayment of a deposit, whether the deposit was made personally or by another person. However, the Act does not define “customer.”
This means that the individual legally entitled to repayment of the funds becomes the depositor even if another person physically deposited the money.
For example:

• a child becomes the depositor where parents deposit money into the child’s account; and
• an employee becomes the depositor where salary is credited into the employee’s account.

Likewise, the Bills of Exchange Act 1949 regulates negotiable instruments but does not define customer status.
Malaysian courts therefore rely heavily on English common law principles in determining the existence of the banker-customer relationship.


Position Under UK Law
The United Kingdom similarly provides no statutory definition of “customer.”
Neither the Bills of Exchange Act 1882 nor the Cheques Act 1957 defines the term.
English courts therefore developed judicial principles through case law to determine:

• who qualifies as a customer; and
• when the banker-customer relationship arises.

The principal authorities include:

• Great Western Railway Co v London and County Banking Co Ltd;
• Robinson v Midland Bank Ltd;
• Commissioners of Taxation v English, Scottish and Australian Bank Ltd;
• Ladbroke & Co v Todd;
• Barclays Bank Ltd v Okenarhe;
• Tate v Wilts and Dorset Bank; and
• Woods v Martins Bank Ltd.

Great Western Railway Principle
In Great Western Railway Co v London and County Banking Co Ltd, the court established that casual banking services alone are insufficient to create customer status.
The House of Lords held that some form of account or recognised banking relationship is necessary before a person becomes a customer.
This case established that:

• occasional banking services alone are insufficient; and
• an account relationship is essential.

Robinson v Midland Bank Ltd Principle
In Robinson v Midland Bank Ltd, the Court of Appeal reinforced that the chief criterion for customer status is the existence of an account through which banking transactions are conducted.
The court explained that:

• casual dealings unrelated to ordinary banking business do not establish customer status; and
• isolated banking services alone are insufficient.

Commissioners of Taxation Principle
In Commissioners of Taxation v English, Scottish and Australian Bank Ltd, the House of Lords clarified that duration of the relationship is not essential.
The court held that customer status may arise immediately once:

• an account is opened; and
• money is accepted into that account.

Thus, the length of the banking relationship is irrelevant.


Ladbroke & Co v Todd Principle
In Ladbroke & Co v Todd, the court held that a person may become a customer even before a cheque has cleared.
The court explained that:

• actual withdrawal of funds is unnecessary; and
• immediate access to funds is unnecessary.

The important factor was that the bank had already accepted the account relationship and accepted the cheque for collection.


Barclays Bank Ltd v Okenarhe Principle
In Barclays Bank Ltd v Okenarhe, the court held that a person is not a customer where the bank merely performs a casual service for him.
The individual had no account and merely received cheque-cashing assistance after being introduced by an existing customer.
The case reinforced that:

• casual banking services alone do not create customer status; and
• introduction by an existing customer is insufficient without an account relationship.

Tate v Wilts and Dorset Bank Principle
In Tate v Wilts and Dorset Bank, the court held that a person who merely intends to open an account is not yet a customer until the banking relationship formally materialises.
The court recognised that the individual would become a customer once:

• the cheque was collected; and
• the account relationship formally commenced.

The case clarified that intention alone is insufficient.


Woods v Martins Bank Ltd Principle
An important contractual development arose in Woods v Martins Bank Ltd.
Facts
The plaintiff was introduced to a bank manager who provided advice regarding investment of money. The manager subsequently dictated a letter addressed to the bank instructing the bank:

• to collect money from a building society;
• to pay part of the proceeds to a company; and
• to retain the remaining balance according to the plaintiff’s instructions.

At that time:

• no formal account had yet been opened; and
• the account was only opened approximately three weeks later.

Held
The court held that:

1. the banker-customer relationship existed from the moment the bank accepted the instructions contained in the letter; and
2. a contractual relationship had already been formed even before formal account opening.

The court reasoned that:

• the negotiations clearly indicated that the plaintiff intended to open an account; and
• the bank was willing to accept him as a customer.

Consequently, a contract had already been concluded between the parties.


Legal Analysis of the Cases
When these cases are read collectively, they establish the modern legal principles governing customer status.
Great Western Railway and Robinson Cases
These cases established that:

• casual banking services alone are insufficient; and
• some form of account relationship is generally essential.

Commissioners of Taxation and Ladbroke Cases
These cases expanded customer recognition by holding that:

• duration of the relationship is irrelevant;
• customer status may arise immediately; and
• actual withdrawal of funds is unnecessary.

Barclays Bank Ltd v Okenarhe and Tate Cases
These cases reinforced that:

• casual services alone are insufficient; and
• mere intention to open an account does not automatically create customer status.

Woods v Martins Bank Ltd Case
This case further expanded the judicial understanding of customer status by recognising that:

• a contractual relationship may establish customer status even before formal account opening; and
• acceptance of banking instructions may itself create the banker-customer relationship.

Together, these cases establish that:

1. casual banking services alone are insufficient;
2. an account relationship is usually essential;
3. duration of the relationship is irrelevant;
4. customer status may arise immediately once the bank accepts the relationship; and
5. contractual arrangements may establish customer status even before formal account opening.

Critical Analysis
The judicial development of the banker-customer relationship demonstrates increasing commercial flexibility.
Earlier cases adopted a stricter approach by focusing heavily on the existence of an account. However, later cases such as Woods v Martins Bank Ltd recognised that contractual dealings and accepted banking instructions may themselves establish customer status.
This modern approach is commercially realistic because banking relationships today frequently arise through:

• online account registration;
• electronic fund transfers;
• fintech applications; and
• digital banking platforms.

Nevertheless, uncertainty still exists concerning:

• cryptocurrency platforms;
• digital wallets; and
• non-traditional financial service providers

where formal banking accounts may not exist in the traditional sense.


Practical Importance
The banker-customer relationship remains extremely important because banks owe significant legal duties once customer status arises.
Examples include:

• a person opening an account for cheque collection becomes a customer immediately;
• a person may become a customer once banking instructions are contractually accepted;
• a business maintaining a current account clearly qualifies as a customer; while
• a person receiving only casual banking assistance without an account remains a non-customer.

Banks therefore require clear account-opening and contractual procedures to establish legal certainty.


Solutions to the Case Scenario
Several measures may reduce disputes similar to Mr. Faiz’s situation.
1. Clear Contractual Documentation
Banks should clearly document when customer status begins during negotiations and banking instructions.
2. Transparent Banking Procedures
Financial institutions should explain:

• account-opening procedures;
• cheque collection stages; and
• the legal effect of banking instructions.

3. Legislative Reform
Malaysia may consider introducing a statutory definition of “customer.”
4. Consumer Awareness
Banks and regulators should educate customers regarding:

• the legal meaning of customer status;
• the effect of contractual banking arrangements; and
• the importance of account relationships.

5. Digital Banking Regulation
Regulators should establish clearer rules concerning fintech and digital banking relationships.
Had these measures existed, Mr. Faiz would have clearly understood that customer status may arise through accepted contractual arrangements even before formal account opening.


Conclusion
The banker-customer relationship forms the legal foundation of banking law because it determines the obligations owed between banks and individuals.
Although Malaysian and UK legislation do not define “customer,” courts have developed detailed judicial principles through case law.
Cases such as Great Western Railway Co v London and County Banking Co Ltd, Robinson v Midland Bank Ltd, Commissioners of Taxation v English, Scottish and Australian Bank Ltd, Ladbroke & Co v Todd, Barclays Bank Ltd v Okenarhe, Tate v Wilts and Dorset Bank, and Woods v Martins Bank Ltd collectively establish that:

• casual services alone are insufficient;
• duration is irrelevant;
• account relationships are generally essential; and
• contractual acceptance of banking instructions may itself create customer status even before formal account opening.

These principles continue to shape modern banking law despite ongoing technological developments in digital finance and fintech services.


References (APA Style)
Barclays Bank Ltd v Okenarhe. [1966] 2 Lloyds Rep 87.
Bills of Exchange Act 1882.
Bills of Exchange Act 1949.
Cheques Act 1957.
Commissioners of Taxation v English, Scottish and Australian Bank Ltd. [1920] AC 683.
Financial Services Act 2013.
Great Western Railway Co v London and County Banking Co Ltd. [1901] AC 414.
Ladbroke & Co v Todd. (1914) 19 Com Cas 256.
Robinson v Midland Bank Ltd. (1925) 41 TLR 402.
Tate v Wilts and Dorset Bank. (1899) 1 Legal (Decisions) Affecting Bankers 286.
Woods v Martins Bank Ltd. [1959] 1 QB 55.

​

​Malaysian Banking Law – Case Scenario: Recovery of Debts Does Not Amount to Carrying on Banking Business

General Overview
​This case discusses an important issue in Malaysian banking law:
Whether a bank that no longer possesses a banking licence can still recover debts owed to it without being regarded as illegally carrying on banking business.

The case of Bank of China v Lee Kee Pin clarified that merely recovering debts does not amount to carrying on banking business under Malaysian banking legislation.
The decision is important because it distinguishes:

• Actual banking operations, and
• Activities connected with winding up or recovering existing debts.

Definition of a Banker in the United KingdomIn the United Kingdom, there is no single exhaustive statutory definition of a banker. The definition mainly comes from judicial decisions and legal writings.

According to Halsbury's Laws of England, a banker is:
An individual, partnership, or corporation whose sole or predominant business is banking, including receiving money on current or deposit accounts and paying and collecting cheques for customers.

Similarly, Dr HL Hart defined a banker as:
A person or company carrying on the business of receiving money, collecting drafts, and honouring cheques drawn by customers from available funds in current accounts.

The leading English case United Dominions Trust Ltd v Kirkwood identified the traditional characteristics of banking as:

• Conducting current accounts,
• Paying cheques,
• Collecting cheques.

However, modern UK law adopts a more flexible approach by focusing on the substance of financial activities rather than strict traditional banking methods.

Definition of a Banker in Malaysia
In Malaysia, the definition of a banker is mainly governed by statute.
Under the Financial Services Act 2013:

• A “bank” means a person licensed to carry on banking business.
• Banking business includes:
  • Accepting deposits,
  • Paying and collecting cheques,
  • Providing finance,
  • Other prescribed financial activities.

The earlier Banking and Financial Institutions Act 1989 and Banking Ordinance 1958 contained similar definitions.
Malaysia therefore adopts a more regulatory and licensing-based approach compared to the UK.

Case Scenario
Facts of the CaseBank of China had previously operated banking business in Malaysia. However, the bank was later refused a licence under the Banking Ordinance 1958.
After losing its licence, the bank commenced legal proceedings against customers to recover outstanding overdraft debts.

The defendant argued that:

• Since the bank no longer possessed a banking licence,
• Recovering debts amounted to carrying on banking business illegally under section 3 of the Banking Ordinance 1958.

The defendant therefore claimed that the bank should not be allowed to continue the legal action.

Legal Issue
The main issue before the court was:
Whether recovering debts after losing a banking licence amounted to carrying on banking business contrary to Malaysian banking law.

Decision of the Court
The High Court held that:
Recovering debts does not amount to carrying on banking business.
Therefore:

• The bank was allowed to continue legal proceedings,
• The action did not breach section 3 of the Banking Ordinance 1958.

Court’s Reasoning
Meaning of Banking Business
The court referred to the statutory definition of banking business under the Banking Ordinance 1958.
Banking business included:

• Receiving deposits,
• Paying and collecting cheques,
• Making advances to customers.

The court observed that:

• Debt recovery does not fall within these activities,
• Recovering loans is different from actively conducting banking operations.

Purpose of the BankingOrdinance
Rigby J explained that the purpose of the Ordinance was:

• To prevent unauthorised persons from actively carrying on banking business without proper capital and licensing.

The law was not intended to:

• Prevent banks from winding up operations,
• Stop banks from recovering lawful debts.

Winding Up Activities
The court recognised that:

• A business may continue certain activities after ceasing operations,
• Recovering debts is part of winding up the business rather than continuing banking operations.

Therefore:

• Debt collection was merely incidental to closing down the business.

Practical Application
Example in Modern BankingSuppose a digital financial platform called FinTechPay Malaysia loses its approval under the Financial Services Act 2013.
After stopping operations, the company files legal proceedings against customers who failed to repay financing facilities.
Customers argue that:

• The company is illegally carrying on banking business without a licence.

Applying Bank of China v Lee Kee Pin:

• The court would likely hold that recovering existing debts is not banking business,
• The company is merely winding up its affairs.

Thus, the debt recovery action would probably be permitted.

Critical Analysis
The case demonstrates a practical and commercially sensible interpretation of banking law.
If recovering debts were treated as banking business:

• Banks could not recover loans after closure,
• Customers might escape repayment obligations unfairly,
• Financial losses and instability could increase.

The decision therefore protects:

• Commercial fairness,
• Financial accountability,
• Proper winding-up procedures.

Deeper Legal Analysis
Functional Approach
The court focused on:

• The real nature of the activity,
• Whether the activity involved active banking functions.

Debt recovery was viewed as:

• A consequence of previous banking transactions,
• Not a continuation of banking business itself.

Importance in Modern Banking
The case remains highly relevant today because many:

• Digital financial institutions,
• FinTech platforms,
• Payment companies

may cease operations yet still need to recover outstanding debts.
The principles from this case may therefore continue applying under modern Malaysian banking legislation.

Unresolved Issues
Scope of Permitted Activities After Licence RevocationHow far may a financial institution continue activities after losing its licence before those activities become unlawful?

Digital Financial Institution
sCan unlicensed digital finance platforms continue enforcing repayment obligations?

Consumer Protection Concerns
Customers may argue that unlicensed institutions should not continue legal enforcement against consumers.

Solutions to the Case Scenario
Solution 1 – Allow Debt Recovery
The court should allow the bank to recover outstanding debts because:

• Recovering debts is not equivalent to carrying on banking business,
• The activity forms part of winding up existing financial affairs.

Solution 2 – Maintain Regulatory Supervision
Although debt recovery is permitted:

• The institution should not continue accepting deposits,
• It should not issue new financing facilities,
• It should not conduct active banking operations without a valid licence.

Solution 3 – Protect Consumers and Financial Stability
Regulators such as Bank Negara Malaysia should:

• Supervise winding-up activities,
• Ensure fair debt recovery practices,
• Protect customers during closure of financial institutions.

Conclusion
The case of Bank of China v Lee Kee Pin establishes that recovering debts does not amount to carrying on banking business under Malaysian law. The court adopted a practical approach by distinguishing between active banking operations and activities connected with winding up a business. This interpretation protects commercial fairness while ensuring that banking regulation continues to prevent unauthorised banking activities.

Malaysian Banking Law – Development Finance Institutions Are Not Banks
Case Scenario
Sabah Development Bank Bhd provided financing facilities to SKBS (Sabah) Sdn Bhd. The facilities included:

• Documentary import credit,
• Revolving credit facilities,
• Letters of credit,
• Import advances,
• Trust receipts,
• Working capital financing.

When the borrower failed to repay the facilities, Sabah Development Bank sued to recover the outstanding debt together with interest.
The defendants argued that:

• Sabah Development Bank was not licensed as a commercial bank under the Banking Act 1973,
• Therefore the transactions were illegal and void under section 24 of the Contracts Act 1950.

Sabah Development Bank replied that:

• It was a development finance institution and not a commercial bank,
• Its financing activities did not amount to banking business,
• Therefore no banking licence was required.

The court therefore needed to determine:
Whether Sabah Development Bank was carrying on banking business without a banking licence.


Sabah Development Bank Bhd v Skbs (Sabah) Sdn Bhd & Ors
[1992] 1 MLJ 454 (High Court)


General Overview
This case is one of the leading Malaysian authorities distinguishing:

• Commercial banks,
• Development finance institutions.

The High Court held that:
Development finance institutions are specialised financial institutions and are not automatically banks merely because they provide financing facilities or use the word “bank”.
The court clarified that:

• Lending money alone does not amount to banking business,
• A corporation does not become a bank simply because it uses the word “bank”.

The court relied heavily on:

• Paget’s Law of Banking,
• United Dominions Trust Ltd v Kirkwood,
• Vernes Asia Ltd v Trendale Investment Pte Ltd & Anor.

Definition of Banker in the United Kingdom
In the United Kingdom, there is no single exhaustive statutory definition of “bank” or “banker”.
The definition developed through:

• Judicial decisions,
• Common law principles,
• Banking textbooks,
• Commercial understanding.

UK Judicial Development of the Definition of Bank
Bank of Chettinad Ltd v IT Commissioners of Colombo
In Bank of Chettinad Ltd of Colombo v IT Commissioners of Colombo, the Privy Council recognised that:

• Banking changes over time,
• Banking differs across countries,
• No universal exhaustive definition exists.

Bank of New South Wales v Commonwealth
In Bank of New South Wales v Commonwealth, Dixon J explained that:

• Banking has a wide meaning,
• Banking forms part of the economic and social structure of society,
• A complete definition is impossible.

United Dominions Trust Ltd v Kirkwood
The leading authority is:

• United Dominions Trust Ltd v Kirkwood.

The Court of Appeal identified three classic banking characteristics:

1. Conducting current accounts;
2. Paying cheques drawn by customers;
3. Collecting cheques for customers.

Lord Denning’s Contribution
Lord Denning famously stated:
“A banker is easier to recognise than to define.”
Lord Denning explained that courts may consider:

• Reputation,
• Stability,
• Soundness,
• Commercial understanding,

when determining whether an institution is a bank.


Paget’s Law of Banking
According to:

• Paget’s Law of Banking,

no one can be a banker unless it:

1. Takes current accounts;
2. Pays cheques drawn on itself;
3. Collects cheques for customers.

This definition strongly influenced the decision in this case.


Halsbury’s Laws of England
According to:

• Halsbury’s Laws of England,

a banker is:
A person or corporation whose predominant business is banking, namely receiving deposits and paying and collecting cheques.


Dr HL Hart’s Definition
Dr HL Hart defined a banker as:
A person or company receiving money, collecting drafts, and honouring customer cheques.


Definition of Bank and Banking Business in Malaysia
In Malaysia, banking business is mainly governed by statute.
Under the Financial Services Act 2013, banking business generally includes:

1. Accepting deposits;
2. Paying and collecting cheques;
3. Providing finance;
4. Other prescribed financial activities.

Malaysia therefore adopts:

• A licensing system,
• Regulatory supervision,
• Oversight by Bank Negara Malaysia.

Licensed Business, Approved Business, and Authorised Business Under Malaysian Law
Licensed Business
Under the Financial Services Act 2013, “licensed business” refers to businesses requiring a licence under section 10.
Licensed business includes:

• Banking business,
• Insurance business,
• Investment banking business.

A person carrying on licensed business must obtain a licence from Bank Negara Malaysia.


Approved Business
“Approved business” refers to businesses that require approval under section 11 of the Financial Services Act 2013.
Approved businesses include activities listed in Schedule 1, such as:

• Operation of payment systems,
• Issuance of designated payment instruments,
• Insurance broking,
• Money-broking,
• Financial advisory business.

These businesses require approval but do not necessarily make the institution a bank.


Authorised Business
“Authorised business” means:

• Licensed business; or
• Approved business.

Therefore, authorised business is a broader category covering both:

• Businesses requiring licences; and
• Businesses requiring approval.

Authorised Person
An “authorised person” means:

• A person licensed under section 10; or
• A person approved under section 11.

Thus, a person may become an authorised person either through:

• A banking licence; or
• Approval for specific financial activities.

Facts of the Case
Sabah Development Bank Bhd:

• Was established by the Sabah State Government,
• Functioned as a development finance institution,
• Provided medium and long-term financing.

The plaintiffs provided:

• Documentary import facilities,
• Revolving credit,
• Trust receipts,
• Import advances,
• Letters of credit.

The defendants argued that:

• Sabah Development Bank was not licensed as a bank,
• Therefore the transactions were illegal.

Legal Issue
The main legal issue was:
Whether a development finance institution providing financing facilities was unlawfully carrying on banking business.


Decision
The High Court held that:
Sabah Development Bank was not carrying on banking business.
The financing transactions were therefore lawful and enforceable.


Court’s Reasoning
Development Finance Institutions Are Specialised Financial Institutions
The court referred to Bank Negara Malaysia’s publication Money and Banking in Malaysia (1959–1989).
The court explained that development finance institutions:

• Promote industrial and agricultural investment,
• Provide medium and long-term financing,
• Complement commercial banking services.

Thus:

• Their role differs from ordinary commercial banks.

Use of the Word “Bank” Does Not Automatically Create Banking Status
Although Sabah Development Bank had ministerial approval to use the word “bank” under section 9 of the Banking Act 1973, the court held that:
Using the word “bank” does not automatically make an institution a bank under section 2 of the Banking Act 1973.
The approval merely allowed the use of the name.


Essential Banking Characteristics Were Missing
The court relied heavily on:

• Paget’s Law of Banking,
• United Dominions Trust Ltd v Kirkwood.

The court stated:
No one can be a banker unless they:

1. Take current accounts;
2. Pay cheques;
3. Collect cheques.

There was:

• No evidence that Sabah Development Bank performed these functions.

The evidence only showed:

• Lending,
• Trade financing,
• Documentary credit facilities.

Therefore:

• Sabah Development Bank was a financier rather than a commercial bank.

Reliance on Vernes Asia Ltd v Trendale Investment Pte Ltd & Anor
The court relied strongly on:

• Vernes Asia Ltd v Trendale Investment Pte Ltd & Anor.

In Vernes Asia, the Singapore High Court held that:
Banking business requires all banking characteristics together.
Thus:

• Making advances alone does not amount to banking business.

The Malaysian High Court adopted the same reasoning.


Comparison With Other Malaysian Cases
Bank of China v Lee Kee Pin
In Bank of China v Lee Kee Pin, the court held that:
Recovering debts does not amount to banking business.
This supports the principle that not every financial activity amounts to banking.


Koh Kim Chai v Asia Commercial Banking Corporation Ltd
In Koh Kim Chai v Asia Commercial Banking Corporation Limited, the court held that:

• Taking and enforcing security alone does not amount to banking business.

Both cases distinguish:

• Core banking activities,
• Ancillary financial activities.

Practical Application
Suppose a government-owned development institution provides:

• Industrial financing,
• Trade financing,
• Long-term project loans,

but:

• Does not accept deposits,
• Does not maintain current accounts,
• Does not process cheques.

Applying this case:

• The institution may be treated as a development finance institution,
• Not necessarily as a commercial bank.

Critical Analysis
This case is important because it separates:

• Development finance,
• Commercial banking.

The decision ensures that:

• Development finance institutions can provide financing without automatically requiring a banking licence.

However, the traditional banking test heavily relies on cheque-related functions. Modern banking increasingly involves:

• Digital payments,
• Electronic transfers,
• Online banking,
• FinTech platforms.

Thus:

• Traditional cheque-based definitions may not fully reflect modern financial realities.

Further Analysis
The case strongly supports:

• A conjunctive interpretation of banking business.

Meaning:

• Lending alone is insufficient,
• All essential banking functions must exist together.

This protects:

• Development finance institutions,
• Finance companies,
• Specialised lenders,

from being wrongly classified as banks.


Unresolved Issues
Digital Banks Without Cheques
Can digital banks qualify as banks without cheque systems?


FinTech Regulation
Should digital financial platforms be regulated as banks?


Modernisation of Banking Law
Traditional banking definitions may require reform to address digital finance.


Solutions to the Case Scenario
Solution 1
Sabah Development Bank should be allowed to recover the outstanding debt because it was not unlawfully carrying on banking business.


Solution 2
The defendants’ argument should fail because there was no evidence that Sabah Development Bank:

• Accepted current accounts,
• Paid cheques,
• Collected cheques.

Solution 3
The court should continue distinguishing:

• Development finance institutions,
• Commercial banks.

Solution 4
Bank Negara Malaysia should continue supervising financial institutions to ensure that non-bank institutions do not conduct licensed banking business without proper authorisation.


Conclusion
Sabah Development Bank Bhd v Skbs (Sabah) Sdn Bhd & Ors confirms that development finance institutions are not automatically banks merely because they provide financing or use the word “bank”. The court adopted traditional UK banking principles developed through United Dominions Trust Ltd v Kirkwood, Paget’s Law of Banking, Lord Denning’s observations, and Vernes Asia Ltd v Trendale Investment Pte Ltd & Anor. The case reaffirmed that the essential characteristics of banking include accepting deposits, paying cheques, and collecting cheques, and that lending activities alone do not automatically amount to banking business.

​

​Malaysian Banking Law – Checklist on the Definition of a Bank


Checklist: Is the Institution a “Bank”?
This checklist is based on:

• Malaysian statutes,
• UK common law principles,
• Malaysian and foreign banking cases,
• Traditional banking law authorities.

The checklist helps determine whether a person, corporation, or institution is legally regarded as carrying on banking business.


Part A – Core Characteristics of Banking
1. Does the institution accept deposits?
✔ Accepting money on:

• Current accounts,
• Savings accounts,
• Deposit accounts,
• Similar accounts.

This is one of the most essential banking characteristics.
Authority

• United Dominions Trust Ltd v Kirkwood
• Paget’s Law of Banking
• Financial Services Act 2013

2. Does the institution pay cheques drawn by customers?
✔ The institution honours cheques issued by customers.
Authority

• United Dominions Trust Ltd v Kirkwood
• Paget’s Law of Banking
• Halsbury’s Laws of England

3. Does the institution collect cheques for customers?
✔ The institution collects and processes cheques deposited by customers.
Authority

• United Dominions Trust Ltd v Kirkwood
• Paget’s Law of Banking

4. Does the institution maintain current accounts?
✔ Customers maintain current accounts with credits and debits recorded.
Authority

• Lord Denning in United Dominions Trust Ltd v Kirkwood

Part B – Financing Activities
5. Does the institution provide financing or loans?
✔ Examples:

• Loans,
• Credit facilities,
• Trade financing,
• Murabaha financing,
• Hire purchase,
• Revolving credit.

⚠ Important:
Providing financing alone does NOT automatically amount to banking business.
Authority

• Light Style Sdn Bhd v KFH Ijarah House (Malaysia) Sdn Bhd
• Vernes Asia Ltd v Trendale Investment Pte Ltd & Anor
• Sabah Development Bank Bhd v Skbs (Sabah) Sdn Bhd & Ors

6. Is the financing activity combined with deposit-taking?
✔ Financing + deposit-taking together strongly suggest banking business.
✘ Financing without deposit-taking usually does NOT amount to banking business.
Authority

• Light Style Sdn Bhd v KFH Ijarah House (Malaysia) Sdn Bhd
• PP Consultants Pty Ltd v Finance Sector Union

Part C – Regulatory and Statutory Factors
7. Is the institution licensed under Malaysian law?
✔ Does it hold a licence under section 10 of the:

• Financial Services Act 2013?

If YES:

• It may carry on licensed business such as banking business.

8. Is the institution carrying on “licensed business”?
✔ Licensed business includes:

• Banking business,
• Insurance business,
• Investment banking business.

Authority

• Financial Services Act 2013

9. Is the institution carrying on “approved business”?
✔ Approved business includes:

• Payment systems,
• Designated payment instruments,
• Financial advisory business,
• Insurance broking,
• Money-broking.

⚠ Approved business does NOT automatically make the institution a bank.
Authority

• Financial Services Act 2013

10. Is the institution an “authorised person”?
✔ An authorised person means:

• A licensed person; or
• An approved person.

Authority

• Financial Services Act 2013

Part D – Nature of Business Activities
11. Is the institution carrying on business continuously?
✔ Continuous and systematic banking activities suggest banking business.
✘ A single isolated transaction usually does NOT amount to carrying on banking business.
Authority

• Banque Nationale De Paris v Wuan Swee May & Anor

12. Does the institution have a physical business presence?
✔ Branches,
✔ Offices,
✔ Banking operations,
✔ Customer service infrastructure.
These factors support a finding of banking business.
Authority

• Banque Nationale De Paris v Wuan Swee May & Anor

13. Is the institution merely enforcing security or recovering debts?
✘ Recovering debts alone is NOT banking business.
✘ Enforcing security alone is NOT banking business.
Authority

• Bank of China v Lee Kee Pin
• Koh Kim Chai v Asia Commercial Banking Corporation Limited

Part E – Development Finance Institutions
14. Is the institution a development finance institution?
✔ Development finance institutions may:

• Provide loans,
• Offer trade financing,
• Support economic development.

⚠ This alone does NOT automatically make them banks.
Authority

• Sabah Development Bank Bhd v Skbs (Sabah) Sdn Bhd & Ors
• Bank Industri (M) Bhd v Technopro Corp (M) Bhd & Ors

15. Does the institution conduct “development finance business”?
✔ Development finance business includes:

• Industrial financing,
• Agricultural financing,
• Economic development financing.

⚠ Such activities are recognised scheduled businesses under Malaysian law.
Authority

• Banking and Financial Institutions Act 1989
• Bank Industri (M) Bhd v Technopro Corp (M) Bhd & Ors

Part F – Reputation and Commercial Understanding
16. Is the institution recognised commercially as a bank?
✔ Courts may consider:

• Reputation,
• Commercial recognition,
• Stability,
• Soundness.

Authority

• Lord Denning
• United Dominions Trust Ltd v Kirkwood

Part G – Final Legal Test
Final Question
Does the institution perform ALL essential banking functions together?
✔ Accept deposits
✔ Maintain current accounts
✔ Pay cheques
✔ Collect cheques
✔ Conduct systematic banking operations
If YES:
→ The institution is likely carrying on banking business.
If NO:
→ The institution may merely be:

• A financier,
• Development finance institution,
• Payment provider,
• Financial intermediary,
• Approved business operator.

Key Principles Summarised
Principle 1
Financing alone does NOT equal banking business.
Cases

• Light Style Sdn Bhd v KFH Ijarah House (Malaysia) Sdn Bhd
• Vernes Asia Ltd v Trendale Investment Pte Ltd & Anor

Principle 2
Recovering debts alone does NOT equal banking business.
Case

• Bank of China v Lee Kee Pin

Principle 3
Taking security alone does NOT equal banking business.
Case

• Koh Kim Chai v Asia Commercial Banking Corporation Limited

Principle 4
A single isolated banking transaction does NOT necessarily amount to carrying on banking business.
Case

• Banque Nationale De Paris v Wuan Swee May & Anor

Principle 5
Development finance institutions are NOT automatically banks.
Cases

• Sabah Development Bank Bhd v Skbs (Sabah) Sdn Bhd & Ors
• Bank Industri (M) Bhd v Technopro Corp (M) Bhd & Ors

Conclusion
The legal definition of a bank depends on:

• Statutory requirements,
• Essential banking characteristics,
• Continuous banking operations,
• Deposit-taking activities,
• Cheque-processing functions,
• Regulatory status,
• Commercial recognition.

Modern Malaysian banking law adopts both:

• Traditional common law banking principles,
  and
• Statutory licensing and regulatory frameworks under the Financial Services Act 2013.

Malaysian Banking Law – Providing Financing Alone Does Not Amount to Banking Business


Case Scenario
KFH Ijarah House (Malaysia) Sdn Bhd granted revolving trade line facilities to Light Style Sdn Bhd.
Under the arrangement:

• The defendant purchased goods requested by the plaintiff,
• The plaintiff promised to purchase the goods from the defendant under a “Promise to Purchase Agreement,”
• The parties later entered into a Murabaha Sale Agreement,
• The defendant sold the goods to the plaintiff at an agreed price.

When the defendant claimed repayment, the plaintiff disputed the debt and argued that:

• The agreements were illegal,
• The transactions contravened the Banking and Financial Institutions Act 1989,
• The defendant was allegedly carrying on banking business without a licence.

The court therefore had to determine:
Whether providing financing alone amounts to carrying on banking business under Malaysian law.


Light Style Sdn Bhd v KFH Ijarah House (Malaysia) Sdn Bhd
[2009] MLJ 575 (High Court)


General Principle Established by the Case
The High Court held that:
Providing financing alone does not amount to carrying on banking business.
The court explained that:

• Banking business under section 2 of BAFIA requires all essential elements together,
• The statutory definition must be read conjunctively and not disjunctively.

Thus:

• Merely providing financing is insufficient to constitute banking business.

Facts of the Case
The plaintiff and defendant entered into:

• A Promise to Purchase Agreement,
• A Murabaha Sale Agreement.

The financing structure involved:

• Purchase of goods by the defendant,
• Resale of goods to the plaintiff at an agreed profit price.

When repayment was demanded:

• The plaintiff challenged the legality of the agreements,
• The plaintiff alleged that the defendant was carrying on banking business without a licence.

Legal Issue
The main issue was:
Whether the provision of financing through Murabaha transactions constituted banking business requiring a licence under BAFIA.


Decision of the Court
The High Court dismissed the plaintiff’s application.
The court held that:

• The defendant was not carrying on banking business,
• Providing financing alone was insufficient,
• No banking licence was required for the transaction.

The court further held that:

• Even if there had been a contravention of BAFIA, section 125 BAFIA would preserve the validity of the agreement.

Banking Business Must Be Read Conjunctively
Rohana Yusuf J explained that under section 2 of BAFIA:
Banking business involves:

1. Receiving deposits,
2. Paying and collecting cheques,
3. Providing financing,
4. Other prescribed business.

The court stressed that:
All three limbs must be read conjunctively and not disjunctively.
Therefore:

• Performing only one activity, such as financing, is insufficient.

The court stated:
“If a person is providing only one of the businesses under the three limbs in section 2, say merely providing financing, such activity would not be sufficient to constitute Banking Business.”


Providing Financing Alone Does Not Require a Banking Licence
The court held that:

• Section 6(4) BAFIA only requires licensing where a person carries on:
  • Banking business,
  • Finance company business,
  • Merchant banking business,
  • Discount house business.

Since the defendant merely provided financing:

• No banking licence was required.

Finance Company Business Also Requires Deposits
The court further noted that even:

• “Finance company business”

under section 2 BAFIA requires:

• Receiving deposits,
  together with:
• Credit facilities,
• Leasing,
• Hire purchase activities.

Thus:

• Financing alone is insufficient even to constitute finance company business.

Section 125 BAFIA Saved the Agreement
The court also held that:

• Even if the transaction had contravened BAFIA,
• Section 125 BAFIA preserved the validity of the agreement.

Section 125 provides that:
Contracts entered into in contravention of BAFIA are not automatically void solely because of the contravention.
The court relied on:

• Coramas Sdn Bhd v Rakyat First Merchant Bankers Bhd & Anor,
• RHB Sakura Merchant Bankers Bhd v Tan Sri Dato’ Ting Pek Khiing (No 1).

Both cases held that:

• Contravention of BAFIA does not automatically invalidate contracts unless the statute expressly declares them void.

Reference to United Dominions Trust Ltd v Kirkwood
The court referred to:

• United Dominions Trust Ltd v Kirkwood.

Lord Denning identified classic banking characteristics as:

1. Accepting money and collecting cheques,
2. Honouring customer cheques,
3. Maintaining current accounts.

The Malaysian court adopted this traditional understanding of banking business.


Reference to Paget’s Law of Banking
The court also referred to:

• Paget’s Law of Banking.

The textbook states:
No one can be a banker unless they:

1. Take current accounts;
2. Pay cheques;
3. Collect cheques.

This supported the court’s conclusion that:

• Financing alone is insufficient.

Reference to PP Consultants Pty Ltd v Finance Sector Union
The court referred to:

• PP Consultants Pty Ltd v Finance Sector Union.

The Australian High Court described banking business as:

• Receiving deposits,
• Creating debtor-creditor relationships,
• Relending collected funds.

This reinforced the traditional definition of banking business.


Reference to Koh Kim Chai Case
The court also relied on:

• Koh Kim Chai v Asia Commercial Banking Corporation Limited.

In Koh Kim Chai:

• Making advances alone did not amount to banking business.

The Privy Council held that:

• The full banking characteristics must exist together.

Reference to Arab-Malaysian Merchant Bank Bhd v Silver Concept Sdn Bhd
The court also referred to:

• Arab-Malaysian Merchant Bank Bhd v Silver Concept Sdn Bhd.

The case recognised the statutory definition of banking business under BAFIA because of limited precedents under Islamic banking law.


Licensed Business, Approved Business, and Authorised Business Under Malaysian Law


Licensed Business
Under the Financial Services Act 2013, “licensed business” refers to businesses requiring a licence under section 10.
Licensed business includes:

• Banking business,
• Insurance business,
• Investment banking business.

A person carrying on licensed business must obtain a licence from:

• Bank Negara Malaysia.

Approved Business
“Approved business” refers to businesses requiring approval under section 11 of the Financial Services Act 2013.
Approved businesses include:

• Payment systems,
• Designated payment instruments,
• Insurance broking,
• Money-broking,
• Financial advisory services.

These activities require approval but do not automatically constitute banking business.


Authorised Business
“Authorised business” means:

• Licensed business; or
• Approved business.

Thus:

• Authorised business is a broader category that includes both licensed and approved financial activities.

Authorised Person
An “authorised person” means:

• A person licensed under section 10; or
• A person approved under section 11.

Thus:

• A person may lawfully carry out certain financial activities without necessarily being a licensed bank.

Relationship With Sabah Development Bank Case
The reasoning is consistent with:

• Sabah Development Bank Bhd v Skbs (Sabah) Sdn Bhd & Ors.

In Sabah Development Bank:

• Lending alone did not amount to banking business,
• Essential banking characteristics were required.

Relationship With Vernes Asia Case
The reasoning also aligns with:

• Vernes Asia Ltd v Trendale Investment Pte Ltd & Anor.

In Vernes Asia:
Lending alone was insufficient to constitute banking business.


Relationship With Bank Industri Case
The approach is also consistent with:

• Bank Industri (M) Bhd v Technopro Corp (M) Bhd & Ors.

That case confirmed that:

• Development finance activities are lawful scheduled businesses,
• Financing activities alone do not automatically amount to banking business.

Practical Application
Suppose a company:

• Provides Islamic financing,
• Grants Murabaha facilities,
• Offers trade financing,

but:

• Does not accept deposits,
• Does not maintain current accounts,
• Does not process cheques.

Applying:

• Light Style Sdn Bhd v KFH Ijarah House (Malaysia) Sdn Bhd,

the company may not be regarded as carrying on banking business.


Critical Analysis
This case is important because it:

• Clarifies the conjunctive interpretation of banking business,
• Protects Islamic financing institutions from being incorrectly classified as banks.

The decision supports:

• Commercial certainty,
• Islamic finance development,
• Financial innovation.

However:

• Modern financial institutions increasingly provide financing without accepting deposits,
• The distinction between financing institutions and banks may become increasingly blurred.

Thus:

• Regulators must carefully supervise non-bank financial institutions.

Further Analysis
The case supports:

• A strict statutory interpretation,
• The traditional understanding of banking business.

The decision also reflects:

• Judicial reluctance to criminalise or invalidate commercial transactions unnecessarily.

The use of section 125 BAFIA further protects:

• Commercial certainty,
• Financial stability,
• Contractual enforceability.

Unresolved Issues
Digital Financing Platforms
Can digital lenders providing financing without deposits avoid banking regulation?


Islamic FinTech
Should Islamic digital financing platforms require banking licences?


Modern Banking Definitions
Traditional cheque-based banking definitions may no longer reflect modern financial systems.


Solutions to the Case Scenario
Solution 1
The Murabaha Sale Agreement should remain enforceable because financing alone does not amount to banking business.


Solution 2
The plaintiff’s illegality argument should fail because the defendant was not carrying on banking business under section 2 BAFIA.


Solution 3
Even if there were a contravention of BAFIA, section 125 would preserve the validity of the agreement.


Solution 4
Bank Negara Malaysia should continue supervising financing institutions to ensure that they do not evolve into unlicensed deposit-taking institutions.


Conclusion
Light Style Sdn Bhd v KFH Ijarah House (Malaysia) Sdn Bhd established that providing financing alone does not amount to banking business under Malaysian law. Banking business under BAFIA must be interpreted conjunctively, requiring the combined existence of accepting deposits, paying and collecting cheques, and providing financing. The reasoning is consistent with United Dominions Trust Ltd v Kirkwood, Paget’s Law of Banking, PP Consultants Pty Ltd v Finance Sector Union, Koh Kim Chai v Asia Commercial Banking Corporation Limited, Sabah Development Bank Bhd v Skbs (Sabah) Sdn Bhd & Ors, Vernes Asia Ltd v Trendale Investment Pte Ltd & Anor, and Bank Industri (M) Bhd v Technopro Corp (M) Bhd & Ors.

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