.: BAFIA 1989:.

The BAFIA has effectively replaced the Banking Act 1973 and Finance Companies Act 1969. The BAFIA is a comprehensive act and extends comprehensive powers to Bank Negara Malaysia to supervise a larger spectrum of financial institutions, with the direct responsibilities to regulate and supervise all licensed institution (commercial banks, finance companies, merchant banks, discount houses and money brokers) and also regulate scheduled and non scheduled institutions. BAFIA 1989 is divided into 16 part and covers a wide spectrum of subject matters related to the banking industry in Malaysia. The act provided the framework that enables the BNM to supervise and regulate the three broad groups of financial institutions: 

• Licensed institutions:Comprising the commercial banks, merchant banks, finance companies, discount houses, money brokers and foreign exchange broker.
• Scheduled institutions :Comprising non-bank sources of credit and finance, which include issuers of credit card and traveller’s cheques, operation of cash dispensing machines, development finance institutions, building societies and housing credit institutions, factoring companies and leasing companies. Also included under this group are representative officer of foreign bank or foreign institution which carried out the business or activities similar to scheduled institutions. 
• Non-scheduled institutions  :Comprising all other statutory bodies and institutions involved in the provision of finance and credits. 

BAFIA also provided BNM the regulatory power to regulate the following : 

1. Control of establishment or acquisition of subsidiaries or opening of offices in Malaysia by a local or foreign licensed institutions. 

2. Maintenance of reverse fund, capital, net working funds, liquid asset by the financial institutions 

3. Appointment of auditors, submission of financial statements, exhibition of financial statements, submission of statistic to BNM