BWBS 2013 ISLAMIC BANK OPERATION
CHAPTER 6
REMITTANCE
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BWBS 2013 ISLAMIC BANK OPERATION
OVERVIEW
• INTRODUCTION
• BANKER’S CHEQUE/ CASHIER’S ORDER/BANK DRAFT
• DEMAND DRAFT
• TELEGRAPHIC TRANSFER
• FEATURES OF DEMAND DRAFT AND TELEGRAPHIC
TRANSFER
• MAIL TRANSFER
• ONLINE TRANSFER
• PROBLEMS WITH TRANSFER SYSTEM
• STANDING INSTRUCTION
• BENEFIT OF STANDING INSTRUCTION
• REMITTANCES POTENTIAL IN MALAYSIA
• ISSUES REGARDING REMITTANCES
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BWBS 2013 ISLAMIC BANK OPERATION
INTRODUCTION
• Money order or remittances mean money transfer by
clients for business or by foreign worker to origin / he or
pass on money from one account to account others or
from one country to the other countries.
• Money Order is also activity that conventional banks &
Islamic bank get involved so that they can generate fee &
commission.
• There are several ways to transfer money such as bank
cheque, demand draft, & online .
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BWBS 2013 ISLAMIC BANK OPERATION
BANKER’S CHEQUE/ CASHIER’S
ORDER/BANK DRAFT
• This is a cheque drawn by the bank.
• Banker's cheque is cheque issued by bank, that
purchased by a person to pay supplier that
unprepared to accept ordinary cheque.
• It issued when customer had no current account but
would like to make payment through cheque or in
the situation where their personal cheque are not
accepted.
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BWBS 2013 ISLAMIC BANK OPERATION
Example of Banker’s Cheque
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BWBS 2013 ISLAMIC BANK OPERATION
DEMAND DRAFT
• Also known as a bank draft.
• It is a cheque drawn by a bank on its Head
Office, on a branch or on another bank for
payment outside the local area, either
domestically or abroad.
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BWBS 2013 ISLAMIC BANK OPERATION
TELEGRAPHIC TRANSFER
• The fastest mode of money transfer used
for delivery of funds within or out of
Malaysia.
• Required within the shortest possible time.
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BWBS 2013 ISLAMIC BANK OPERATION
FEATURES
DEMAND DRAFT TELEGRAPHIC TRANSFER
• Transfers of funds by
• Transferring funds within telegraph, telex, cable or
and outside the country. SWIFT from a bank to its
• Demand draft paid for by branch or another bank
the customer at the time authorizing the payment of
issue. funds to specified person or
account.
• Types of DD:
• Types of TT:
1. Local Demand Draft (RM)
1. Local Telegraphic Transfer
2. Foreign Demand Draft
(Foreign currency) 2. Foreign Telegraphic
Transfer
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BWBS 2013 ISLAMIC BANK OPERATION
MAIL TRANSFER
• WHAT IT IS???
-banking service that allows users to transfer funds between personal account
using email
-A simple, convenient, and secure way to send and receive money directly from
one bank account to another.
• HOW IT WORK???
-Customer can send or receive money with an email address or mobile phone
number and a bank account only through access to online or mobile banking
participating institutions.
-Commonly used by client of the “big five“ bank in Canada.
-email & text messages are used to notify recipient or to provide instruction to
bank to deposit the money. Recipient & depositor’s banks do the transfer.
-advantages: available 24/7 through online banking, easy & faster to send,& pick,
easy to track money online
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BWBS 2013 ISLAMIC BANK OPERATION
ONLINE TRANSFER
• WHAT IT IS??
-Customers can handle account management and make account transaction
directly through the internet
-Also known as internet banking or electronic funds transfer (EFT)
• HOW IT WORK??
-customer are able to access to all of their account through an internet
connection
-allow customer to monitor account, transfer funds between accounts.
-For example, using debit card to buy things from supermarket transfer money
from your account into the supermarket account, electronic bills payments
DISADVANTAGES: Security problems. Hackers often try to steal customers
information & money.
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BWBS 2013 ISLAMIC BANK OPERATION
PROBLEMS WITH TRANSFER SYSTEM
• Formal vs Informal channels.
• Cost of transfer
• Inadequate Financial
Infrastructure
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BWBS 2013 ISLAMIC BANK OPERATION
STANDING INSTRUCTION
• Standing instructions are a way of making
an automatic payment of a fixed amount to a
loan, bill, or credit card at the same
time every week or month. It can be made
from your savings or checking account and
is most commonly used to make payments to
a mortgage, car loan, or to pay bills.
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BWBS 2013 ISLAMIC BANK OPERATION
BENEFIT OF STANDING
INSTRUCTION
• Automatic guaranteed money transfer to given
accounts of individuals
• Quick payment realization without visiting
bank
• Regular payments realization
• Opportunity to change amount, date,
frequency, account detail
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BWBS 2013 ISLAMIC BANK OPERATION
REMITTANCES POTENTIAL IN
MALAYSIA
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BWBS 2013 ISLAMIC BANK OPERATION
Exercises:
1. Shahril wants to pay his credit card usage
2. Zul bougt a motorcycle from Yamaha Motor Sdn Bhd and want s to pay the
company.
3. Aisya takes a medical insurance from Takaful Ikhlas and wants to have the payment
deducted monthly
4. Jamal bought a handphone from Samsung. He wants to pay Samsung using his
debit card.
5. Nurasyidah suddenly reminds of her mother. She wants to transfer an amount of
money to her mother.
6. Afdhal, a maid who works in Malaysia wants to send money to her parents in
Combodia.
7. Siti Nadia wants to send a pocket money to her sister who studies in Australia.
8. Aden buys a car priced RM150 000 from Mitsubishi Motors. He wants to pay the
deposit of the car.
9. Alif is wondering whether money transfer is permissible in Islam.
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