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Objectives & Functions of BNM

Objectives & Functions of BNM. Bank Negara Malaysia is the central bank for Malaysia. It was established on 26 January 1959, under the Central Bank of Malaya Ordinance, 1958, with the following objectives: To issue currency and keep reserves safeguarding the value of the currency;

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Objectives & Functions of BNM

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  1. Objectives & Functions of BNM Bank Negara Malaysia is the central bank for Malaysia. It was established on 26 January 1959, under the Central Bank of Malaya Ordinance, 1958, with the following objectives: To issue currency and keep reserves safeguarding the value of the currency; To act as a banker and financial adviser to the Government; To promote monetary stability and a sound financial structure; and To influence the credit situation to the advantage of the country.

  2. Banking and Financial Institutions Act 1989 (BAFIA) • came into force on October 1, 1989 • provides for the licensing and regulation of institutions carrying on banking, finance company, merchant banking, discount house and money-broking businesses; • regulation of institutions carrying on scheduled business comprising non-bank sources of credit and finance, such as credit and charge card companies, building societies, factoring, leasing companies and development finance institutions

  3. Monetary Stability • Stability of Malaysian currency, RM • Price stability – low inflation – purchasing power • To preserve future value of savings and future returns on investments • BNM conducts its monetary policy by influencing the level of interest rates on loans and deposits • When econ. Overheating, high inflation – increase interest rate and vise versa when econ. slow • BNM monetary tools/instruments: • govt. papers, SRR, discount window

  4. Developmental Role • Developing the necessary institutions and market infrastructure – modern & strong financial system • A) Strong payment system • B) good credit culture among banking institutions - (Central Credit Reference Info System – CCRIS • - collects and disseminates credit info on all borrowers – loan applications • C) establish new institutions such as: • -Credit Guarantee Corp., • -National Savings Bank (small borrowers), • -Bank Industry and Teknology(export and shipping industry),

  5. Development Financial Institutions (DFIs) • Bank Pembangunan Malaysia Berhad • Bank Perusahaan Kecil & Sederhana Malaysia Berhad (SME Bank) • Export-Import Bank of Malaysia Berhad • Bank Kerjasama Rakyat Malaysia Berhad • Bank Simpanan Nasional • Bank Pertanian Malaysia

  6. Other DFIs • Malaysian Industrial Development Finance Berhad • Credit Guarantee Corporation Malaysia Berhad (CGC) • Lembaga Tabung Haji • Sabah Development Bank Berhad • Sabah Credit Corporation Berhad

  7. Other non-bank financial intermediaries • Cagamas Berhad • Employees Provident Fund (KWSP) • Permodalan Nasional Berhad (PNB)

  8. Institutes / Associations of Industries affiliated with the Bank • Institute of Bankers Malaysia • Malaysian Insurance Institute • Association of Islamic Banking Institutions Malaysia • Life Insurance Association of Malaysia • General Insurance Association of Malaysia • International Association of Insurance Supervisors • Financial Mediation Bureau (FMB) • Credit Counseling and Debt Management Agency

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