Application Procedures for New Licences under Financial Services Act 2013 and Islamic Financial Services Act 2013

Pursuant to section 10 of the Financial Services Act 2013 FSA and the Islamic Financial Services Act 2013 IFSA, Bank Negara Malaysia the Bank is responsible for assessing applications for licences to carry on banking, Islamic banking, insurance, takaful, or investment banking business. The assessment takes into account relevant factors including prudential requirements and whether granting the licence would be in the best interest of Malaysia.

This policy document outlines the application and assessment process for –
(a) prospective applicants under section 10 of the FSA seeking a licence to carry on:
(i) banking business;
(ii) investment banking business;
(iii) life business;
(iv) general business; or
(v) professional reinsurer business; or

(b) prospective applicants under section 10 of the IFSA seeking a licence to carry on:
(i) Islamic banking business;
(ii) international Islamic banking business;
(iii) family takaful business;
(iv) general takaful business;
(v) professional retakaful business; or
(vi) international takaful operator business.

Licensed persons carrying on investment banking business under FSA must also hold a Capital Markets Services Licence (CMSL) issued by Securities Commission Malaysia (Securities Commission) to conduct regulated activities pursuant to section 58 of the Capital Markets and Services Act 2007 (CMSA).

This policy document sets out—
(a) considerations under the law in assessing an application for a licence set out in paragraph 1.2;
(b) the application procedure, including arrangements to submit an application to Securities Commission for a CMSL with the intention of carrying on investment banking business; and
(c) the information and documents to be submitted to the Bank to facilitate the assessment of the application.

Where the proposed licensed person has not been established/ incorporated, the applicant should be the controlling and/or majority shareholder of the proposed licensed person.

In line with the Bank’s approach to regulating and supervising financial groups1, shareholders with an aggregate interest in shares of more than 50% in the proposed licensed person is expected to be—
(a) an existing licensed person under the FSA or IFSA;
(b) a financial holding company approved under the FSA or IFSA; or
(c) a foreign institution regulated by a supervisory authority outside Malaysia which exercises functions corresponding to those of the Bank under the FSA or IFSA.

This document belongs to Bank Negara Malaysia (BNM). Full access to the original source is available here: https://www.bnm.gov.my/banking-islamic-banking