Posted by: Financial Sith Lord | March 13, 2010

Malaysian Financial System and Legislation… A definite death row..

About 2 years ago, my wife, who has (and still does) a savings account with a Malaysian bank (that adopts a tiger as its logo), was deprived of her own hard-earned money when the bank robbed her of RM 900. The whole story goes like this.. My wife had deposited a local cheque amounting to RM 1,000 into her account. On the scheduled clearing day, she checked her account through an ATM machine (of another Malaysian bank) at a nearby petrol station, and the screen proudly displayed the cleared cheque’s amount. Needing some cash for her to go to work, she withdrew RM 100 and was on her way. Around lunch time, she went to her bank’s ATM, and when she tried to withdraw RM 800, the machine displayed an error saying that there was insufficient funds to execute the transaction. Puzzled, she quickly retrieved her bank balance, and was shocked to see that her balance was RM 9.12!!

She immediately went to the nearest branch, and lodged a complaint. She was duly advised to lodge a police report, and she immediately did so at the nearest police station. After settling all the police report formalities, she went again to the branch, and submitted a formal complaint. As she was waiting for her turn at the bank’s customer service desk, there was another lady, ahead of her, lodging a similar report. Seems that she lost RM 1,000 that day. Furious, my wife made a big hoo haa at the branch, to a point where the branch manager came for assistance. She explained what happened and the manager quickly clicked through his computer terminal. After initial checking, the transaction record showed that my wife had apparently made an internet transfer to an Indonesian bank based in Jakarta. The irony is that, at that time, my wife was not a subscriber to their internet banking service.!!

Approximately 2 months later, an officer from the bank’s internet banking department called to say that they found the transaction to be legitimate, hence they would not be entertaining my wife’s claim for reimbursement. That was that!!.. Why I’m bringing up this matter? Yesterday, I read in the local Malay daily, that a security guard was deprived of his salary of RM 1,200 when he found that his bank balance was short of his credited salary amount. After investigating it further with the bank officers at a KLCC branch, they confirmed that the transaction was an internet banking transfer, and was sent to an Indonesian bank based in Jakarta… Same story isn’t it??

After 2 years, these abnormalities are still rampant despite numerous police reports made against the bank. And yet, no action has been taken, neither from the Royal Malaysian Police, nor from the authoritative fellows in Bank Negara… and yet, these institutions are aggressively pursuing illegal deposit takers and quick-rich scheme operators.. At least, these quick-rich scheme operators are promising some form of returns to their customers.. The bank in subject is taking people’s money indiscriminately.. That’s suppose be alright?

Do you realize, that the Malaysian Financial System and Legislation cannot monitor or do anything, should a bank decide to take their customer’s money?? The proof is this.. Say Bank ABC plans to acquire a foreign bank on foreign soil for RM 500 million. To raise a financial facility for the acquisition would be costly for them, especially in these economic climate. So, the other viable option is to::: Take RM 500 from its 1 million customers, and declares it a technical glitch.. Yes people would complaint, but they could simply send out a letter saying that it take approximately 6 – 8 months to investigate the matter.. After a year or so, or after they’ve raked in their profits from the acquisition, all they have to do is return the taken money to the 1 million customers.. all together amounting to RM 500 million. Their financial cost for the acquisition?? RM 0… wow..

Another crux or flaw in the system is the absence of automated application for Statutes of Limitations within the financial system. Say, someone aged 35 was declared a bankrupt by the bank as he had stood as guarantor for a defaulted loan. Worst still, he was not even aware that he had stood as guarantor!! (There is no protection for that as well!!).. So after 15 years, he is still unable to find a job (as he is highly qualified and trained professional), he can’t open a checking account, he can’t apply for any kind of loans with any banks in Malaysia (with the exception moneylenders, off course!!).. and he is deprived of performing his religious rights of umrah and haj!! And when he calls the bank concerned regarding settlement of the so-called loan that he so-called stood as guarantor, the bank says that they do not have any records for that anymore… So what the hell is this person suppose to do? This is a definite death row sentence for him!!

The person I’m referring to is someone dear to me, and he is not the only one facing that problem. Unfortunately, there’s more than 10,000 people or souls, that is suffering from this hell-hole. Under the Statutes of Limitation of Malaysia, there are limitations of time applicable to every course of legal actions, and may ranges depending on the nature of the offence itself. Say for criminal offences, yes there is an infinite time frame, but for legal initiatives that falls under the financial system, there are specific time frames.. For example, a Bankrupt can be discharged of his/her bankruptcy after 5 years from the date he/she was made a bankrupt.. The problem is that, this application is not automated. The person in subject would have to formally apply for discharge to the Director-General of Insolvency Malaysia, of which, his/her identity is unknown!!. Not only that, you would have to personally go to the various credit information bureaus (CTOS, FIS & CCRIS) to get your name off their list!! The worst part is that… 99% of this suffering souls do not know this rights!!!

In Singapore, a person can only be declared a bankrupt for a maximum period of 3 years.. After that, the person automatically gets a clean slate.. i.e. a second chance in life.. Even if you were to commit a criminal offence, you go to prison for a specific period.. say 10 years or even 30 years.. But with the system in Malaysia, a person who is declared a bankrupt at the age of 35, may die at the age of 70 and still be a bankrupt!!.. So, where’s the justice here? What are the people in authority (Bank Negara, Attorney-General etc) are doing? Are justice meant for those who had never made any mistake in life? The law and legislation are meant to protect people from being cheated by other people… but not by the government-linked banks and the government itself?

To be frank, I truly respect the moneylenders and the Ah Longs, because yes, they take hefty profits from their customers, but they are impartial to any credit ratings or reports.. As long as you can pay back the money, plus their profits, they are okay to lend you some.. No guarantors.. no questions asked… and you get the approval within minutes.. So tell me, who is helping who here? The government (with the introduction of financial stimulus packages that is just like any other ordinary banking loans) or these petty money lenders?? Either way, humans (that do make mistakes in life) that was born and bred in Malaysia, are heading straight to worldly hell!! Some how or rather, Angels are barred from helping these kind of people.. Perhaps things will change when an Arch-Angel steps in and rule the country!!.. So far, none at sight..

What say you??



  1. Yes, I agree with you becasue i’m going through same problem…. My life is misserable not able to take a loan…my kids suffer the most embarrasment although they don’t tell me…In my life it’s most obvious because I can’t buy a car on HP loan…how sad is that…I just hope the goverment will find some solution for this. Unlike those who work for the government they can still take a loan although being blacklisted….wat about us who don’t and not bumiputra? I just hope some solution will be thought about.

  2. Dear Jess, we as parents, the most valuable treasures that was bestowed upon us are our children, and to see them silently suffer for our mistakes, and yet putting up a brave face in front of us, is the most heart-wrenching and devastating experience a person could face. I understand what you’re going through as I was that children when I was small, and I am that parent with those kind of children today.

    Sometimes, we do get tired with all the politics, redtapes and bureaucracies often professed by the current politicians (unlike the times of Tunku Abdul Rahman, Tun Razak & Tun Hussein Onn), which is exactly my state. Thus it brought me to write down my personal views on the existing government’s policies from a perspective different from others. Somehow, some of my opinions are being taken to point, for example the Tekun issue. I do not wish to claim the limelight, as I know that our beloved country is overwhelmed by plagiarism. But the most important thing is that, at least, my points and opinions are heard and actions had been taken.

    I will utilize whatever resources that I posses, and all the financial knowledge that I have, in order to come up with probable solutions for each and every issue faced by my fellow Malaysians, regardless of their age, race, gender, religion and political views. Please do come back from time to time. Maybe, my rants could be related to you??…


  3. Dear FSL, Thank you for understanding my situation. Yes, it is really difficult and I’m taking one day at a time and praying for some solution be brought up. It’s sad that ppl like us don’t get a second chance. I just hope that some kind of method or solution to this matter is brought up. I’m suffering silently too. I pity my kids the most as they are not able to travel comfortably and public transport is really terrible. Thank you once again for this wonderful knowledge and opinion.

  4. bro 100% i agree with you,20 years ago i had a car repossessed didn’t know the law or my right.i was declared a bankcrupt. till today i can’t get a proper job cause can’t open bank account once i tried to and was humiliated by a bank staff who said in a loud voice in front of every body that i can’t open a bank account cause i was a bankcrupt.i tried calling the bank they asked for 10000 ringgit as a front payment.if i had that sort of money i would be free.
    until today im still in a fix trying to solve this problem
    if only the bank reschedules my payment i would gladlly pay up.

    well lawmakers don’t care for the bancrupty gus like me.we have been convicted of this crime.
    we are a criminal who didn’t pay the money
    so by the way i see it. its (NO WAY OUT)

    • Hi Zech,

      it is definite that the Malaysian Financial System and Legislation needs a major revamp and overhaul, to suit the ever increasingly sophisticated society of Malaysia. It also needs to be sensitive towards the human characteristics and nature, thus allowing people to repent and recover from their past mistakes, be it if was caused by themselves or otherwise.

      The Members of Parliament and Senate needs to discuss these matters at length and implement a long term solution that would address these issues. Mind you, these issues are not small!! It could affect the Malaysian economy adversely in the near future. We could turn out to be like Singapore, where the local economy are mainly contributed by foreign immigrants living in the country. Locals would drift off and become part of the economic under-current driven by these immigrants.

  5. you know,i work in a construction company for years.but i have no epf or socso. i asked them they said,you are a contract worker.why they know im bankcrupt and know i cannot find any other i keep quite and work cause i have a family to feed.
    the indonesian contractor,who works for my company makes so much money that they are rich back in their they pay no tax,no quit life.
    how i see it ( we malaysian are becoming pendatang while the foreigner becomes anak watan)now they even give them loans.
    so how do i tell the lawmakers

  6. as i see it nowadays there are many people out there who are facing financial problems due to numerous reasons. some because of their own folly, while others are exploited by their employers by being lowly paid. i do not see a solution in sight when the governor of bank negara is always painting a rosy picture of our economy by citing impressive numbers to the public. the suffering rakyat is not of their concern while they are more interested in impressing the foreign investors who end up exploiting the workers even more. more than a miracle is needed to make the ministers understand what the rest of us are going through. maybe they are not smart enough to do so. i rest my case.

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