The Salient Features of the DFIA
Recognising the unique characteristics of each DFI, DFIA is structured to allow flexible application of the Act on selected DFI or on specific role, function and operating structure of each selected DFI.
The Act empowers Bank Negara Malaysia to be the administrator of the Act which serves as the centralized supervisory body for the DFIs. The centralised regulatory body plays a strong coordination role in the overall supervision of DFIs. It aims at ensuring effective and dynamic supervision of DFIs.
There is strong emphasis to ensure that the roles, objectives and activities of the DFIs are consistent with the Government policies and that these mandated roles are effectively and efficiently implemented. For this purpose, DFIA provides several mechanisms to enable Bank Negara Malaysia to monitor the role and objectives of DFIs. Among others, DFIA requires DFIs to submit their proposed business and development activities and projected sources of funding on an annual basis to Bank Negara Malaysia. In addition, the Bank is empowered to specify lending activities of the DFIs. DFIA also provides a mechanism to monitor the management of Government-allocated funds to ensure that the funds are utilised as specified.
DFIA lays emphasis on efficient management and effective corporate governance by prescribing the procedures for the appointment of directors, chief executive officer and external auditor. The Act also provides adequate mechanisms to enhance disclosure of information in a timely and transparent manner. This is aimed at harnessing sufficient check and balance and enhancing accountability by the board of directors and management.
DFIA provides a comprehensive supervision mechanism which incorporates prudential rules, on-site and off-site supervision, reporting requirements and disclosure standards. It also provides the regulator with the necessary powers to deal with any mismanagement and malpractices.
The legislation provides the mechanism to strengthen the financial position of DFIs through the specification of prudential requirements such as in the management of assets, capital and liquidity management.
- Selective application of the Act
- Centralised regulatory body
- Monitoring role and objectives of DFIs
- Efficient management and effective corporate governance
- Comprehensive supervision mechanism
- Strengthen financial position and improve efficiency of asset and liability management