Chapter financial System of Malaysia Financial System Structure in Malaysia

 
Table 2: Islamic Banking Products  
No. 
Islamic 
Principle 
Clarification 
Purpose 
Banking Products 
1 Al-Wadiah 
guaranteed 
custody 
for deposit-taking 
products 
current deposits, 
savings deposits 
2 Al-Mudharabah profit-sharing investment deposits 
general and special 
investment accounts, 
project financing, sell 
and buy back 
agreements 
3 
Al-Murabahah 
cost-plus 
for financing facilities 
working capital 
financing, bonds, 
commercial papers 
4 Bai’Bithaman 
Ajil 
deferred 
payment sale 
for house financing 
Housing loan, 
negotiable instrument 
of deposit, 
commercial property 
financing, credit card, 
umrah financing, 
project financing 
5 
Al-Ijarah 
Leasing 
for leasing and vehicle 
financing 
leasing of machines, 
vehicle financing, 
financing 
syndication, bonds 
6 Al-Musyarakah profit 
and 
loss 
sharing 
for project financing 
project financing, 
share financing, unit 
trust financing, 
financing syndication 
 
5.2.6 
Discount Houses
Discount houses began operations in Malaysia since 1963. Generally, the discount houses 
specialise in short term money market operations and mobilise deposits from the financial 
institutions and corporations in the form of money at call, overnight money and short term 
deposits. The funds mobilised are invested in Malaysian Treasury bills, Malaysian Government 
Securities (MGS), banker acceptances (BAs), negotiable certificates of deposit (NCDs), Cagamas 
bonds and Floating Rate Negotiable Certificates of Deposit (FRNCDs), as well as to provide an 
active secondary market for these activities.  
5.2.7 
Representative Offices of Foreign Banks in Malaysia 
There are 32 foreign banks that have establishing representative offices in Malaysia, with all 
concentrated in Kuala Lumpur. Most of the banks originate from Europe and Japan.
Representative office is merely a liaison office and does not offer banking products directly to the 
Malaysian market.