Assignment BOP Madam Aisyah

KOLEJ PROFESIONAL MARA BANDAR MELAKA
SESSION 1

DIPLOMA IN ISLAMIC BANKING & FINANCE
BANKING OPERATION AND PRACTICES
(MGT 3663)

TOPIC : COMPARISON ON BANKING OPERATION BETWEEN ISLAMIC BANK AND
CONVENTIONAL BANK

PREPARED FOR : MADAM NOOR AISYAH BINTI OTHMAN ID NUMBER
BMF1906072
PREPARED BY : BMF1906067
BMF1906076
NAME BMF1906084
KHAIRUNNISA’ NASUHA BINTI FAIRUZ AZLAN
SARAH NAJWA AFRINA BINTI SAIFUL BAHARI
SHARIFAH FAEZAH BINTI SYED ABDUL NASIR

NUR NADIAH BINTI AHMAD SHUKRI

SUBMISSION DATE : 26 APRIL 2021

TABLE OF CONTENT PAGE
3
NO CONTENT 4
1. Acknowledgement 5
2. Introduction 10
3. Sources of fund ( Current Deposit Account ) 15
4. Uses of Fund ( Automobile Financing ) 16
5. References
6. Appendix

2

ACKNOWLEDGEMENT

Alhamdulillah, first of all we would like to thank Allah as we were finally able to complete
the assignment that has been given by Madam Aisyah for us to submit before the end of this
month. This task has been done with all the efforts and cooperation of our team members which
include Sarah Najwa, Sharifah Faezah, Khairunnisa’ Nasuha and Nur Nadiah.

The success and final outcome of this assignment required a lot of guidance and help
from many people and we were very fortunate to be able to obtain all of this throughout the
completion of our assignment work. Everything that we have done can only be completed with a
lot of guidance and assistance particularly from our lecturer which is Madam Aisyah. Thank you
very much for giving us this opportunity to do the assignment work and providing us all the
support and guidance which made us be able to complete the assignment on time.

Last but not least, we are very grateful that we got each other back, always stick together
and work hard to produce a good assignment with such a great teamwork and responsibility.
Hopefully all the effort we put in completing this assignment will bring us many benefits in the
future.

3

INTRODUCTION

Finance is the lifeblood of business concern, because it is interlinked with all activities
performed by the business concern. In a human body, if blood circulation is not proper, body
function will stop. Similarly, if the finance not being properly arranged the business system will
stop.

Finance can be obtained from many different sources. Some are more obvious and well-
known than others. In the contemporary Islamic banking operations, financing extended to
customers are sourced from deposit funds and investment funds. The deposit funds are intended
for savings or safekeeping and guarantees repayment of the sum deposited, the investment funds
are to be invested without guarantee of any profit of return of the principal.

Besides, the most common feature of any Islamic commercial banks involves two main
sectors, namely, the personal or retail sector and the corporate or trade sector. However, not all
retail financing involves personal customers exclusively and likewise, not all corporate financing
involves customers with corporate business operations. There are two types of uses of funds in
Islamic finance, which are Islamic retail financing and corporate financing. Islamic retail financing
consisting of home financing, personal financing and automobile financing. The corporate
financing consists term financing, trade financing and working capital financing.

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CONTENT

SOURCES OF FUND – CURRENT DEPOSIT ACCOUNT

Islamic Bank Conventional Bank

(Bank Muamalat) (Hong Leong Bank)

Introduction Current Account-I is an Islamic concept The Hong Leong Current Account is a non-

of Qard-based current account. Qard interest bearing current account that

refers to a contract in which a customer includes a cheque book as well as an

as lender lends money to a bank as overdraft facility. Account holders will be

borrower, with the latter obligated to given an ATM or debit card that can be used

repay an equivalent replacement to make transactions at nearby ATMs and

amount of the lender. The Bank pay for purchases at nearby retail outlets.

guarantees the repayment of the funds Account holders will also have access to the

and will return them to the lender in convenience and comfort of Internet

accordance with the Bank's procedures. banking with Hong Leong connect and

phone banking.

Eligibility  Applicable to individual, clubs,  Applicable to societies, small
societies, trustees, institutions, business, club, associations and
association & Business Entities schools

 Malaysians and permanent  Age must above 18 years old
residents reside in Malaysia  Minimum RM500 to open the

 Age must above 18 years old account.
 Join account are allowed

Requirements  Minimum age 18 years old  Minimum age 18 years old
 Minimum Initial Deposit  Minimum Initial Deposit RM500
 Malaysians only
RM1,000
 Malaysians only

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Islamic Bank Conventional Bank
(Bank Muamalat)
(Hong Leong Bank)

Fees & Transactions Fees & Transactions Fees &
Charges
Charges Charges

1. Dishonoured 1. Dishonoured

Cheque Outward Return

- Insufficient fund RM100.00 Cheques

- Technical - Insufficient funds RM150.00

reasons within - Technical Error

drawer’s control RM10.00 RM10.00

- Post-dated 2. Dishonoured Inward

cheque returned Return Cheques

- Honouring RM10.00 - Post dated reason

pending cheques only RM10.00

3. Third and RM10.00 per

RM50.00 per subsequent cheque cheque book
cheque
RM20.00 per books in a calendar and RM0.15
account
2.Closing of month per cheque
account for RM2.00
account opened (Service leaf
less than 3 charge)
months 4. Issuance of cheque RM0.15 per
book cheque
 Service - stamp duty
charge
5. Cheque Processing RM0.50 per
3.Encashment of Fee issuance
Third Party 6. Postage charges for RM5.00
Cheque via over- Return Cheques
the-counter 7.Stop Payment upon RM10.00
- If amount less request
than RM10,000 - On cheque issued

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- If amount is RM5.00 - Due to loss or stolen RM10.00
equal or more (Service cheques or cheque RM10.00
than RM10,000 charge) book
4. Cheque book Actual courier 8. Stop Payment upon
collection charge presentation of stop
5. Half-yearly RM10.00 for payment cheque
service fee each half in - If sufficient funds
- For average June or - If insufficient funds
balance less than December
RM1,000 RM150.00
6. Debit Card RM8.00
Issuance Fee RM12.00 9.Cheque encashment
- Standard RM12.00
- Platinum at non-domicile branch
7. Debit Card RM12.00
Annual Fee  First party No charge
8. Debit Card  Third party RM5.00 on
Replacement Fee
encashment

- Cheque payee and

amount RM2.00 on

RM5,000.00 drawer.

and below

- Cheque RM7.00 on

amount payee and

above RM2.00 on

RM5,000.00 drawer.

10.Destruction of

uncollected Cheque

Book (more than 28

days)

 Individual RM30.00
Account

 Business RM50.00
Account

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Islamic Bank Conventional Bank
(Bank Muamalat) (Hong Leong Bank)

Interest rate -

Balance Interest rate
RM1,000 2.27% p.a.
RM5,000 2.27% p.a.
RM10,000 2.27% p.a.
RM20,000 2.27% p.a.
RM50,000 2.27% p.a.
RM100,000 2.27% p.a.
RM200,000 2.27% p.a.
RM500,000 2.27% p.a.

Contract Tawarruq Interest based contract
used
Bank Muamalat Current Account-i The higher the interest rate, the more
Benefit
Tawarruq is a Shariah-compliant deposit money a customer deposits in their

account in which you can deposit money current deposit account. Any

and get a fixed monthly return. This adjustments on the deposit rates and

current account's principal and benefit the bank’s notification of interest rates

are pledged under PIDM terms, up to a will be published online and made

limit of RM250,000. available at the Bank's Banking Halls.

 Able to access cashflow  Open an account with just

conveniently in three prongs, RM500

which are checking facility, ATM  Cheque book will be provided

withdrawal and online banking.  Minimum RM500 to open the

 Able to open a new account via account

i-Muamalat

 Full Debit Card functions

 Automatic fund transfer for

collection accounts

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Modus 1. The customer will provide the bank 1. The customer will provide the bank
Operandi
with all the information regarding the with all the information regarding the

purpose for opening the current account. purpose for opening the current

2. The bank will check all of the account.

documents and terms. 2. The bank will double-check all of the

3. The bank will sign the tawarruq information.

contract with the customer 3. The interest-based agreement will

4. The customer will pay RM500 to open be signed by the bank and the

an account and receive a cheque book customer.

and debit card. 4. To open the account, the customer

5. The bank will transfer the funds to the will pay RM1,000 and accept the

current account. cheque book and debit card.

6. The customer will pay the profit to the 5. The bank will transfer the funds to

bank based on the profit sharing ratio. the current account.

6. According to the agreement, the

customer will pay the interest plus

profit to the bank.

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USES OF FUND – AUTOMOBILE FINANCING

Islamic Bank Conventional Bank

(Bank Muamalat) (Hong Leong Bank)

Introduction Muamalat Vehicle Financing- (MVF-i) is Hong Leong automobile financing

Eligibility a vehicle financing facility based on a is a car loan package that is
Requirements
Shariah contract of Murabahah to the appropriate for new, old, and

Purchase Orderer (MPO). This package reconditioned vehicles. It allows

allows consumers to buy a car with a people to purchase a car with any

financing margin of up to 100 percent. arrangement other than a full-cash

This facility is calculated on a flat rate single lump payment (outright

basis, and the customer's car will be payment).

pledged as collateral against the

financing

 Monthly gross income :  Minimum annual income :

RM2,300 RM24,000

 Age of entry : 18 to 65 years  Age of entry : 21 to 70

old years old

 Nationality (Malaysians and  Malaysians

foreigners)

 Application form  Document of NRIC

 Photocopy of MyKad and  Driving License

Customer’s ID  Latest three months salary

 Latest 3 month’s salary slip slips

 Letter of confirmation from the  Latest Letter of BE (with

Employer tax payment receipt)

 Latest EPF statement with

at least 6 months

contribution

 Latest three months bank

statement

 Letter of employment

10

Margin of Margin of Financing : Up to 90% Margin of Financing : Up to 90%
financing & Financing Tenure : Up to 9 years Financing Tenure : Up to 9 years
Financing
Tenure

Financing rate Islamic Bank Conventional Bank
(Bank Muamalat) (Hong Leong Bank)
Profit rate Term Charges
- Minimum 2.33% p.a. (Flat) - Based on a margin

depend on car’s make and above the Bank’s
model Bbase Lending Rate
(BLR) and not
exceeding 17% p.a.
Instalments
- The number of
instalments shall be
revised whenever there
is a BLR revision
Late Payment Interest
- 2% above prevailing
rate of term charges
Early Loan Settlement
- No penalty fee
- Net balance amount
outstanding due plus
accrued term charges
up to the next payment
due date

11

Islamic Bank Conventional Bank
(Bank Muamalat) (Hong Leong Bank)

Charges & Services Charges Services Charges
Penalty Late Penalty 1% p.a. in
fee arrears
Profit Rate for (Ta’widh) Late payment -Car loan Fixed
new cars From 2.95%
p.a. to 3.1% charges rate : 8% p.a.
Stamp Duty p.a. depending
on car brand, on overdue
borrowing
amount and instalment
period.
RM10.00 -Car Loan

variable rate :

2% above

prevailing rate

of term

charges

Ad-hoc services

-Duplicate HP

agreement,

Duplicate AP

Documents,

Invoice, Insurance

Cover Note,

Puspakom report,

Guarantee

agreement,

Supplemental

agreement, Letter RM2.00 per

of Set-off (LOSO) , page

Charge Over Cash

Deposit

- Duplicate RM2.00 per

registration card, page

12

vehicle ownership

certificate (VOC)

- Consent letter to RM20.00 per

Authorities : request

transfer of vehicle

to East Malaysia or

Vice Versa

Stamp Duty RM10.00

Contract used Murabahah Purchase Orderer Hire Purchase

The customer will place an order Hire purchase contract is used which

with an Islamic bank to buy products allows businesses or individuals to own

with the promise of repayment (may and control an asset for a set period of

be binding or non binding). The time while paying rent or instalments to

Islamic bank purchases and pays the cover depreciation and interest to cover

seller for the products. The Islamic capital costs. It is also a financing

bank enters into a murabaha deal option for businesses that want to buy

with the customer and deliver the assets but don't want to pay the full

goods. The customer pays the bank price right away. The customer makes

in instalments or in cash for the an initial deposit, with the remaining

items. balance and interest paid over time.

Ownership of the asset is transferred to

the customer upon completion.

Benefit  Bank Muamalat can provide  Borrow up to 70% of the

you a margin of financing of purchase price or market value

up to 100% of the vehicle of the car, whichever is lower

price, starting from a  Enjoy fixed monthly

minimum of RM20,000 instalments based on a flat

 Bank can finance any other interest rate

related cost such as Wasiat  Loan repayment of up to 7

and Group Credit Family years.

Takaful (GCFT)

13

Modus 1. Customers are designated as the 1. The client contacted the seller and
Operandi bank's sales agents for the purpose stated his desire asset to purchase it.
of buying a car from a dealer. He asked the seller for a price
Customer promises and undertakes quotation as well as other details.
to buy the car from the bank in an 2. The seller provided all the
irrevocable and unconditional informations included the brochure
manner. and the terms and conditions.
2. On behalf of the bank, the buyer 3. Customer then contacted the bank
bought the cars from the dealer. for the loan financing. Both agreed
The cars are sold to customers on a using the loan agreement.
murabahah basis by the bank. 4. The user paid the installment with
3. The client makes a deferred the interest to the bank monthly.
deposit to the bank for the 5. Once the year of the agreement is
purchase price. settled, the bank transferred the full
4. The customer gives the bank the ownership to the customers.
vehicles as security or collateral.

14

REFERENCES
1. https://www.muamalat.com.my/consumer-banking/deposit/current-account-i/
2. https://ringgitplus.com/en/current-account/Bank-Muamalat-Current-Account-i-Tawarruq.html
3.https://www.muamalat.com.my/downloads/consumerbanking/PDS_CA_Qard_v6_191119_(2).
pdf
4. https://www.hlb.com.my/en/personal-banking/deposits/current-account/current-account.html
5. https://www.hlb.com.my/en/personal-banking/help-support/fees-and-charges/deposits.html
6. https://ringgitplus.com/en/current-account/Hong-Leong-Current-Account.html
7.https://www.hlb.com.my/en/personal-banking/news-updates/hlb-revision-of-interest-rates-
conventional-fixed-deposits.html
8.https://www.hlb.com.my/en/personal-banking/promotions/dp-fd-bundle-promo-nov-dec-
2020.html
9.https://www.muamalat.com.my/consumer-banking/financing/vehicle-financing/muamalat-
vehicle-financing-i/
10. https://www.hlb.com.my/en/personal-banking/loans/motor-loan/auto-loans.html
11. https://www.hlb.com.my/content/dam/hlb/my/docs/pdf/Personal/Loan/Auto-Loan/hlb-auto-
loan-product-disclosure-sheet-variable-rate-en.pdf
12. https://ringgitplus.com/en/car-loan/Hong-Leong-Auto-Loan.html
13. https://ringgitplus.com/en/car-loan/Bank-Muamalat-Vehicle-Financing-i-GradPack.html

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APPENDIX
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