Podcast
Questions and Answers
Commercial banks provide financing services to individuals only.
Commercial banks provide financing services to individuals only.
False
Banks act as intermediaries between borrowers and depositors.
Banks act as intermediaries between borrowers and depositors.
True
The minister of finance does not need to approve any banking services.
The minister of finance does not need to approve any banking services.
False
Current account facilities are not provided by commercial banks.
Current account facilities are not provided by commercial banks.
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Banks do not deal with foreign exchange services.
Banks do not deal with foreign exchange services.
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Banking services only include the provision of loans and advances.
Banking services only include the provision of loans and advances.
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The primary function of a commercial bank is to make investments in the stock market.
The primary function of a commercial bank is to make investments in the stock market.
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The banking industry is highly regulated by government in most countries.
The banking industry is highly regulated by government in most countries.
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The Financial Services Act 2013 defines a bank as a person who carries on insurance business.
The Financial Services Act 2013 defines a bank as a person who carries on insurance business.
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A commercial bank's primary source of funds is from shareholders.
A commercial bank's primary source of funds is from shareholders.
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The Anti-money Laundering and Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 is a banking law that regulates commercial banks.
The Anti-money Laundering and Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 is a banking law that regulates commercial banks.
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Commercial banks are only allowed to accept deposits on current accounts.
Commercial banks are only allowed to accept deposits on current accounts.
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Banks lend money to low-quality borrowers to maintain or improve the portfolio management of the bank's assets and capital.
Banks lend money to low-quality borrowers to maintain or improve the portfolio management of the bank's assets and capital.
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Islamic banks operate independently of the conventional banking sector.
Islamic banks operate independently of the conventional banking sector.
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Banks borrow more on long-term debt and provide more short-term loans during maturing transformation.
Banks borrow more on long-term debt and provide more short-term loans during maturing transformation.
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Islamic banks are licensed under the Islamic Financial Services Act 2013 and operate according to Shariah Law.
Islamic banks are licensed under the Islamic Financial Services Act 2013 and operate according to Shariah Law.
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Bank Negara Malaysia (BNM) only approves Islamic banking operations.
Bank Negara Malaysia (BNM) only approves Islamic banking operations.
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Banks are required to pay zakat on their net income.
Banks are required to pay zakat on their net income.
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Penalty or overdue payment charges are recognized as an expense.
Penalty or overdue payment charges are recognized as an expense.
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Shareholders' interest is not important in Islamic banking.
Shareholders' interest is not important in Islamic banking.
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Capital refers to the undistributed profits and other capital reserves.
Capital refers to the undistributed profits and other capital reserves.
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Loan activities utilize less than half of bank resources.
Loan activities utilize less than half of bank resources.
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Banks' major sources of funds come from borrowings from other financial institutions.
Banks' major sources of funds come from borrowings from other financial institutions.
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The competent authority is responsible for investigating offenses under the AMLATFPUAA.
The competent authority is responsible for investigating offenses under the AMLATFPUAA.
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Money laundering involves only two stages: placement and concealment.
Money laundering involves only two stages: placement and concealment.
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A person who acquires proceeds of any unlawful activity is not considered to be involved in money laundering.
A person who acquires proceeds of any unlawful activity is not considered to be involved in money laundering.
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The AMLATFPUAA promotes a collaborative and single-agency approach.
The AMLATFPUAA promotes a collaborative and single-agency approach.
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Concealing the nature of proceeds of any unlawful activity is not an offense under the AMLATFPUAA.
Concealing the nature of proceeds of any unlawful activity is not an offense under the AMLATFPUAA.
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Smuggling currency to foreign land without currency control and legislation against money laundering is not a method of money laundering.
Smuggling currency to foreign land without currency control and legislation against money laundering is not a method of money laundering.
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Study Notes
Commercial Bank Functions
- Provision of current account facilities where payment can be made through issuing cheques
- Mobilization of savings through current, savings, and fixed deposit accounts
- Provision of various banking facilities and services
- Granting loans and advances to businesses and individuals
- Financing of government through purchase of government securities and TBills
Importance of Banking Business
- Credit intermediation
- Netting and settlement of payments
- Acting as both collection and paying agents for customers
- Participating in interbank clearing and settlement system
Definition of Bank and Commercial Bank
- Legal definition: jurisdiction created and regulated by government
- Definition by Financial Services Act 2013 (FSA): "a person which carries on banking business"
- Activities include: receiving deposits, making advances, paying or collecting cheques, and approving other business by the Minister of Finance
Islamic vs Conventional Bank
- Islamic bank: business operations do not involve anything that is not approved by Shariah Law
- Licensed under the Islamic Financial Services Act 2013
- Based on profit-sharing basis or profit from trading transactions
- Status of relationship with clients is buyer-seller, lessor-lessee, partners, or principal-agent
Sources and Uses of Funds
- Major sources: deposits, savings, current and time deposits, negotiable certificate of deposits (NCDs)
- Amount borrowed from other financial institutions, inter-bank borrowing, capital and reserves, debentures, and notes
- Uses: loan activities, amount due to financial institutions, and others
Anti-Money Laundering and Anti-Terrorism Financing (AMLATFPUAA)
- Promotes a collaborative and multi-agency approach
- Defines the powers and functions of the competent authority, enforcement agencies, and supervisory and regulatory authorities
- Defines money laundering: engaging in a transaction that involves proceeds of any unlawful activity, acquiring, receiving, or concealing proceeds of any unlawful activity
Money Laundering Stages
- Placement: physical disposal of cash proceeds derived from illegal activity
- Methods: using companies with high turnover as a front, smuggling currency to foreign land without currency control and legislation against money laundering
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Description
Test your understanding of commercial banking with this quiz, covering topics such as the definition of a bank, functions of commercial banks, and differences between Islamic and Conventional banks. Learn about the sources and uses of funds, banking laws, and regulations. Assess your knowledge of Financial Services Act 2013 and Islamic Financial Service Board.
