TABLE OF CONTENT

NO. CONTENT PAGES

REMITTANCE

1 OVERVIEW OF REMITTANCE IN MALAYSIA 2

REGULATION / GUDELINE
BANKER CHEQUE

CIMB BANKER CHEQUE

DIFFERENCES BETWEEN BANKER CHEQUE AND
2
DEMAND DRAFT
DIFFERENCES BETWEEN CHEQUE AND BANKER
CHEQUE
STAND INSTRUCTION

3 MAYBANKS STAND INSTRUCTION

DEMAN DRAFT

OVERVIEW OF STEP TO MAKE DEMAND DRAFT

HOW TO MAKE DEMAND DRAFT
4 DEMAND DRAFT BY ONLINE
CANCELLATION OF DEMAND DRAFT
CIMB BANK DEMAND DRAFT

5 CONCLUSION

6 REFERENCE

REMITTANCE

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 REMITTANCE is a transfer of funds to an overseas account or local. Example when
parents want to send money to their child who is studying overseas or foreigners who work in
Malaysia and need to send money to her/his country. It also can be describe with transfer of
money from one place to another which is not involve the physical movement of cash.

OVERVIEW OF REMITTANCE SERVICS IN MALAYSIA:

Traditionally remittance services in Malaysia was provided only by the banking

institutions. With the growing importance and significance of remittance flows, in particular
remittance abroad by foreign workers in the country and the objectives to increase access to
formal remittance channel, the bank has liberalized the policy to allow non-bank players to
provide remittance services. Consequently, total outward remittance through the formal
channel had grown significantly by 11.7% to RM13.4 billion in 2010. A more competitive
environment in the remittance industry has also contributed towards enhancing services to
customer in terms of lower cost, faster speed and more extensive channels for remittance
transaction.

REGULATION / GUIDELINE

The remittance industry is regulated under the Exchange control act 1953 and the
payment systems act 2003. Specific legislation to regulate the money-changing industry, that
is the money-changing act 1998, was enacted in March 1998. The MSB, money services and
business act 2011 provides a single, uniform and dedicated regulatory framework for
licensees carrying on money services business, comprising any or all of the following:

Money changing business

Remittance business
Wholesale currency business.

There are two type of remittance:

1. Outward remittance
Payment of money.
Local outward remittance involves the transfer of Malaysian Ringgit to a
beneficiary within Malaysia.

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 Foreign outward remittance involves the transfer of money in foreign currency or
Malaysia ringgit from Malaysia to a payee outside Malaysia.

2. Inward remittance
Receipt of payment

BANKER CHEQUE

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 Banker cheque or cashiers order is issued by bank and drawn on itself. In actual fact,
it is strictly speaking, not a cheque, since it is not drawn by one party on a bank, as defined in
the Bill of Exchange Act 1949, which state that a cheque is a bill of exchange drawn on a
banker payable on demand. According to section 5(2) of of the Bills of Exchange Act 1949,
this document, that is cashiers order maybe treated as a bill of exchange or as promissory
note. Nevertheless, whatever it is, it is valid document. A cashiers order is very useful both
to the banker and customers for making payments in place of using cash.

Lets us consider two simple examples to understand and appreciate the usefulness
and convenience of using a cashiers order for making (or receiving) payment. A bank, in the
normal course of its business, may require to purchase an additional safe. Thus, rather than
paying by cash which may amount to a few thousand ringgits, the bank merely has to issues
its cashiers order in payment for the safe. Likewise, not many of us have currents accounts.
A person may just operate a saving account with a bank. One day, he decides to buy a house.
Thus, he may need to make progressive payments to the development company in accordance
with the stages of completion of the house. Payment by cash can be rather risky in view of
the money he has to carry each time. A simple solution is the purchaser approaches his bank
to purchase a cashiers order made out to in the name of the development company vendor. In
payment, the bank debits the purchasers saving account with the an equivalent amount (plus
a small amount for handling charges). Thus the purchaser just merely takes the cashiers
order to hand it to the vendor. This effectively saves him the trouble and security risk of
carrying cash around.

A person may also use cashiers order to make other payments, rather than using cash
in order to avoid the trouble and security of carrying cash around. Cashiers orders also used
to apply for new share issues and right issues. It should be noted that a cashiers order is
generally used for payments within the same locality.

BANKERS CHEQUE (CIMB BANK)

Example :-

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FEATURES & BENEFITS BY (CIMB BANK)

All bankers cheques are pre-printed with the crossing NOT NEGITIABLE
To be issued for use only within the clearing area of the issuing bank and if cleared
outside the clearing area then the normal outstation cheque commission is payable.
Should be accepted as good by the payee as it has been paid for the customer at the
time of issue.it cannot be returned except for technical reasons.
To be used by customers who do not have a current account but wished to make
payments by cheques, or in situations when a personal cheque is unacceptable.
Issued in Malaysian Ringgit only.

FEES AND CHARGES BY (CIMB BANK)

Products / Items Charges or Fees

Bankers cheque RM5 and stamp duty of RM0.15

BANKER CHEQUE BC AND MIDF/MIF PUBLIC SHARE ISSUE (BANK ISLAM)

SUBJECT CHARGE RATE / AMOUNT

Issuance of banker cheque RM2.12 + RM0.15 (stamp
or BC-MIDF/MIH BC duty)
Cancellation and RM2.12 per piece
replacement bankers
cheque or MIDF/ MIH BC
Banker cheque or Stamp duty will be charge RM10.00 (stamp duty)
MIDF/MIH BC reported lost for the indemnity letter
regardless of the amount

Below are one of the example Maybank bankers cheque

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 picture 1

DIFFERENCES BETWEEN BANKERS CHEQUE AND DEMAND DRAFT

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BASIS FOR BANKERS CHEQUES DEMAND DRAFT
COMPARISON
Definition Bankers cheques or Demand draft is a negotiable
payment order is a cheque instrument used to transfer
issued for making the money form one person at
payments within the same one city to another person in
city. another country.

Validation period Bankers cheque is valid up Demand draft is also valid

to 3 months from the date of up to 3 months form the date
issues. of issued.

Special feature All bankers cheque are pre- Demand draft should be
printed with NOT issued with A/c payee
NEGOTIABLE. crossing.

Clearance It can be cleared in any bank It can be cleared at any bank

of the branches in the same branch of the same bank.
city

DIFFERENCES BETWEEN CHEQUE AND BANKERS CHEQUE

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HOW CAN YOU USE A CHEQUE?

A cheque is only use for the people you know and trust, you can use cheque to pay someone,
or getting paid by someone.

PAYING SOMEONE :- you can pay anyone with a cheque, if they accept it. Some business
dont accept cheque because there is a risk involved if the cheque bounces.

GETTING PAID :- only accept cheques from people you trust. If it turns out that the cheque
is a fake, or the person doesnt have enough money to pay it, it might be difficult to get hold
of the money.

CHEQUE WRITING BASICS

Writing the name of the person or organisation youre paying.

Draw a line through any blank spaces on the cheque so people cant add extra numbers or
names.
Add details such as reference or account number to the payee line.
Keep the cheque stub that contains the details and reference
Make sure that you have enough money in your account to cover the value of the cheque
until the person has paid it in and the money has been deducted. If you dont some bank
might charge you for a fee for the bounced payment.

WHEN DOES THE MONEY LEAVE / ENTER YOUR ACCOUNT

WHEN YOU WRITE A CHEQUE :- the money usually leaves your account three
working days after the person pays in your cheque.
WHEN YOU PAY IN A CHEQUE :- You will be able to use the money four working
days later but you wont be sure the cheque has been cleared until six working days after
youve paid it in. if you use the money in the meantime, you might be have to paid it
back.

WHEN YOU CAN USE BANKERS CHEQUE

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Known as a bankers cheque, is like asking a bank to write a cheque for you. You give them
your money and they will give you a cheque for that amount to give to the person you are
paying. For this reason, they do not bounce because of a lack of funds.

HOW LONG DOES BANKERS CHEQUE TAKE TO CLEAR

The money on bankers draft is accessible four days after its been paid in. however, you
wont be sure if it is been cleared until six working days after it is been paid it in. if you
spend the money in the meantime, you might have to paid it back.

WHEN SHOULD USE BANKERS CHEQUE

Bankers cheque are often used for larger amounts and when people or organisations wont
accept a personal cheque. There are a number of ways to transfer money to and from your
bank account which can be transfer faster and safer than using

STAND INSTRUCTION

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 If the payment is not required regularly or frequently, the customer may approach the
remitting bank as and when it is required each time. However, if payment of the same amount
is required periodically, the remitter may arrange with the remitting bank to effect the
payment under standings order (also known as standing instruction). Under this arrangement,
the customer does not have to instruct the remitting bank every time a remittance is required.
All the customer has to do is to complete the standing order form with the pertinent details
and signs it before handing it to the remitting bank. The remitting bank will get this standing
order form duty stamped and thereafter effect the periodically payments in accordance with
the instructions there in.

One importance point to note is that the customer must ensure that his account
maintains sufficient funds to meet the periodically payments at all the times, as otherwise the
remitting bank may not be able to effect the payment or payments. Thus, under the standing
order arrangement, the customer may intrust the remitting bank to make payments (by
cashiers order, demand draft or telegraphic transfer) periodically, say monthly, bi-monthly,
quarterly, semi-annually or annually. Figure 1.1 & 1.2 show example of eStanding instruction
by Maybank

Figure 1.

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Figure 2.2

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 EXAMPLE OF E-STANDING INSTRUCTION BY MAYBANK

E standing instruction Regular funds transfer and bill payments

made by creating and managing standing
instructions online
Fees RM2 for each eSI transaction and interbank
funds transfer
Daily transaction limit to 3rd party accounts Up to RM3000

Service availability 6 am to 12 am daily

Features Type of payment

Funds transfer to own accounts
3rd party (maybank) or interbank fund
transfer
Payments to selected payee corporations
Mabankcard credit card payments
Mabankcard loan instalments.

Types of maintenance Create eStanding instruction

View transaction history of eStanding
instruction
Update the details of eStanding
instruction
Make enquiries on eStanding instruction
Delete/cancel eStanding instruction
Benefits No more late payments charge
Manage your eStanding at your own
convenience, from anywhere.
Flexibility to create, update or cancel
eStanding instruction.
Choose to make your payments weekly,
monthly, quarterly, half yearly, or yearly.
Who can apply Anyone with a maybank currents or saving
account linked to maybank2u.com
How it works After you have created an eStanding
instruction, maybank will transfer or pay the
amount on the effective date based on the

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 frequency of payment until the termination
date. For e.g, if you enter the information as
shown below when creating a new eSanding
instruction, maybank will transfer RM300
from your account to the 3rd party account
on the 3rd of every month starting from 3
september 2007. The last transfer will be on
3 december 2008

DEMAND DRAFT

As mentioned above, a cashiers order may be used to make payment within the same
locality, for example, a person staying in Ipoh purchasing a cashiers order from his bank
based in Ipoh to pay the development company vendor in Ipoh. However, if the vendor is in
Johor Baharu, it would not be suitable to use a cashiers order. The reason is, if the vendor
pays the cashiers order into his account with his bank in Johor Baharu, the cashiers order

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 would be treated as an outstation cheque and this takes five business days to get cleared. In
this particular case, a demand draft is appropriate.

A demand draft is a bill of exchange or payment order issued by a bank, which is

drawn on another bank or another branch in another location either within this country or
overseas, instructing the drawee bank or branch to pay to the payments named in the demand
draft upon presentation of the said demand draft. This case will shows us to understand and
appreciate how a demand draft operates. You are based in Johor Baharu and your son is
studying in Penang. You now need to send RM5000 to your son. There are few alternatives
available to effect this payment, such as issuing a cheque and sending it to your son using
your banks ATM transfer of funds facility, or requesting a friend or relative in Penang to
advance him the cash.

In the case of issuing a cheque, your son may not get the cash immediately since it
requires five business days to get the cheque cleared before your son may use the proceeds.
In the second instance, generally the bank imposes a limit from RM 1000 to RM3000 for
transfer of funds through ATM facility. As for the these alternative, you may need to have a
friend or relative in Penang to do it. To avoid all these hassles, a simple solution would be
purchasing a Demand Draft for your son.

The whole scenario may be illustrated as follows:

(1) Approaches the bank to purchase the demand draft Remitting Bank
Customer in Johor Baharu
Remitter in
Johor Baharu

(2) Upon finalisation, hands the demand draft

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 (4) Despatches the demand draft (3) Notifies the bank of the issuance of the

demand draft

Beneficiary in Branch of
Penang Correspondent
Bank in Penang

(5) Presents demand draft for payment

Sources : book of banking & finance Malaysia

OVERVIEW OF STEPS TO MAKE DEMAND DRAFT

You can make the demand draft by visiting the bank. If you have account in the bank
then you can pay by cheque. Else you need to pay by cash. You also can make demand draft
online. If you make the demand draft by visiting the bank then you will get the demand draft
within 30minutes. But if you order it through online, it would take few days and would de
delivered to your correspondence address.

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 HOW TO MAKE DEMAND DRAFT

1. FILL THE FORM : visit any bank and ask for a demand draft application form or fill
the form online.
2. FORM DETAILS : you need to fill up the details like the mode in which you want to
pay through cash or from your account using cheque. In whose favour the DD is to be
made (beneficiary), the amount, the place where DD will be encashed, cheque
number, your bank account number, you signature etc.
3. DEMAND DRAFT CHARGES : the bank will provide the demand draft once you
submit the form along with the money/cheque and the demand draft charges. The
charges vary from bank to bank.

DEMAND DRAFT BY ONLINE

You can fill the details online and can decide to collect in person from your branch or
delivered through carrier. Through carrier it may take 2 5 days. You may be charged for
courier. Many bank also allow demand draft to be delivered to beneficiary address in
Malaysia. The demand draft requested will be process on the next working days.

CANCELLATION OF DEMAND DRAFT

Once you create (demand draft) the amount will be deducted immediately from your account.
If for any reason, you want to cancel the DD and want to get the deducted money back into
your account, you must have to go to bank.

If you already have original DD, there can be two cases.

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 1. You got the DD by paying cash if you got the DD by cash deposit, you need to
submit original DD as well as receipt of cash payment. Amount will be refunded to
you in cash immediately with some deduction of amount.

2. If you paid the amount if DD from your account in this case, you just need to submit
original DD with filled cancellation form. Amount will be credited back into your
account with some cancellation charge.
If you dont have original DD with you the the process of refunding or cancelling the
DD will be tough.
To cancel the DD and if you dont have the original DD with you, you need to sign
indemnity bond in stamp paper for the bank. After that, most of the bank refund the
amount with taking some time i.e one week, but some bank will take time till expiry
date of DD.

EXPIRATION OR VALIDATION PERIOD OF DEMAND DRAFT

A demand draft is valid for a period of 3 or 6 months form the date of issue. If it is not
presented within that period of time, the demand draft will not be valid and money
will not be automatically refunded. Then the purchaser of the draft should approach
the branch concerned bank which issued the draft and submit an application for
revalidation of the draft. The draft will be revalidated by the bank branch after
verifying their original records, and would extend validity period by another three
month from the date of revalidation. A draft which has been revalidated once, cannot
be further revalidated, which means that you have to present the draft to the bank
within the revalidated period.

DEMAND DRAFT (CIMB)

FEATURES OF A DEMAND DRAFY BY (CIMB)

Transferring funds within and outside the country

If funds are to be sent abroad, the draft is drawn on a bank in a foreign country in the
appropriate currency,

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 Demand draft is paid for by the customers at the time of issue. The customer send the
draft to the payee who presents it at the drawee bank for payment.
Types of demand draft:-

1. Local demand draft

2. Foreign demand draft

For issuance of MIDF and MIH shares issue.

sources from cimb.com

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sources from cimb.com

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 CONCLUSION

REMITTANCE is a transfer of funds to an overseas account or local which is not involve the
physical movement of cash. Remittance services in Malaysia was provided only by the
banking institutions. Competitive environment in the remittance industry also has contributed
towards enhancing services to customer in terms of lower cost, faster speed and more
extensive channels for remittance transaction. There are two type of remittance, it is Outward
remittance and Inward remittance. Outward remittance is payment of money which is
customer transfer their money into second party account. However, Inward remittance,
customer get a receipt of payment from bank as a proof of the transaction.

Banker cheque or cashiers order is issued by bank and drawn on itself. A cashiers
order is valid document and it is very useful both to the banker and customers for making
payments in place of using cash. A customer may use cashiers order to make other payments,
rather than using cash in order to avoid the trouble and security of carrying cash around.
Cashiers orders also used to apply for new share issues and right issues. It should be noted
that a cashiers order is generally used for payments within the same locality.

Standings order or stand instruction is used when customers want to make a payment
regularly with same amount of cash. Such as, payee an insurance, utility and others. To make
a standing order, customer has to complete the standing order form with the pertinent details
and signs it before handing it to the remitting bank. One importance point to note is that the
customer must ensure that his account maintains sufficient funds to meet the periodically
payments at all the times, as otherwise the remitting bank may not be able to procced the
transaction.

A demand draft is a bill of exchange or payment order issued by a bank, which is

drawn on another bank or another branch in another location either within this country or
overseas, instructing the drawee bank or branch to pay to the payments named in the demand
draft upon presentation of the said demand draft.

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 REFERENCE

1. LEGAL ASPECTS IN BANKING PRACTICES BY SURIANOM MISKAM

2. BANKING AND FINANCE MALAYSIA BY JOHNSON PAN
3. INTERNET SOURCES
WWW.MAYBANK2U.COM/REMITTANCE
WWW.CIMBBANK.COM/REMITTANCE

4. BLOG (FINANCIAL CONSULTANT)

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