Financial inclusion ¡ª the provision of suitable, affordable and quality financial services to all segments of society ¡ª contributes to a balanced and sustainable economic growth and development. Promoting a sound, progressive and inclusive financial sector is articulated in the Central Bank of Malaysia Act 2009 as a primary function of BNM, which reinforces our strategic focus on driving financial inclusion policies. In advancing financial inclusion, a range of measures have been undertaken since 2011, thereby expanding access to and provision of financial services (Diagram 1). Nonetheless, some financial capability gaps remain to be addressed (Diagram 2).
Diagram 1: Financial Services Access and Provision
Implement comprehensive agent banking framework to expand access to financial services.
Expand financial products and services to meet diverse and distinct needs of the underserved.
Enhance the role and capacity of Development Financial Institutions (DFIs).
Strengthen monitoring framework for financial inclusion initiatives and outcomes.
Enhance the knowledge and capacity of the underserved in using financial services responsibly.
Sub-districts1 with access to financial services
Population living in sub-districts with access to financial services 2
Customers with active deposit accounts
Diagram 2: Financial Literacy & Capability
| Malaysia | Average1 | OECD1 | |
|---|---|---|---|
| Financial Behaviour2 | 68.1 | 59.2 | 59.2 |
| Financial Knowledge3 | 52.3 | 62.8 | 65.8 |
| Financial Attitude4 | 54.9 | 59.2 | 61.6 |
| Financial Literacy Score | 59.7 | 60.5 | 62.0 |
Financial Inclusion Framework
Diagram 3: Holistic Framework to Further Financial Inclusion
| Desired outcomes |
Vision
An inclusive financial system that best serves all members of society, including the underserved, to have access to and usage of quality, affordable, essential financial services to satisfy their needs towards shared prosperity.
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Convenient accessibility
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High take-up
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Responsible usage
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High satisfaction
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| Broad Strategies |  |
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1Innovative channels
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2Innovative products & services
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3Effective financial institutions & infrastructure
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4Well-informed & responsible underserved
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| Ten action plans to achieve the mandate |
1. Introduce agent banking 2. Leverage technology-based innovative channels |
3. Introduce flexible microfinancing 4. Introduce microsavings product 5. Introduce micro-insurance/takaful |
6. Strengthen development financial institutions' capabilities 7. Organise structured training programmes in financial inclusion 8. Introduce framework for measurement and Financial Inclusion Index |
9. Collaborate with non-governmental organisations for capacity building programmes 10. Improve financial literacy |
The FSBP (2011-2020) has identified 10 key action plans based on the strategic outcomes of innovative channels and products and services, empowering the underserved with financial knowledge and strengthening the financial institutions and infrastructure. In the past decade, some of these action plans have been implemented and some are currently on-going efforts to further advance financial inclusion.
For more information, view the following publication:
Improving Access to Financial Products & Services
In meeting the diverse financial needs of all segments of the society, particularly the underserved and rural community, Bank Negara Malaysia promotes the use of technology as well as the provision of accessible and innovative products and services by financial institutions.
Network of Financial Access Points
A financial access point is a place that provides minimum financial services of accepting deposit and facilitating withdrawal of funds by customers. Financial access points include bank branches, mobile units of the financial institution, deposit and withdrawal electronic terminals and bank agents.
Internet and Mobile Banking
A well-functioning payment system is crucial for the efficient operation of the financial market as well as to support the Malaysian economy. As such, the promotion of a safe, secure and efficient payment system is an important objective of Bank Negara Malaysia.
Accessible Financial Products & Services
Basic Banking Services
Basic Savings Accounts (BSA) and Basic Current Accounts (BCA) are offered at all banking institutions to Malaysians and permanent residents. These accounts can be opened under individual or joint names. Small and Medium Enterprises (SMEs) particularly the micro enterprises are also eligible to apply for BCAs. BSA and BCA operate in the same way as the ordinary savings or current accounts except that these accounts enable you to perform only basic transactions and at a minimal cost or for free.
For more information, download the Guide to Basic Savings and Current Accounts.
Microfinancing
Financing amount of up to RM50,000 and without collateral, Pembiayaan Mikro are offered to micro enterprises and self employed individuals in a fast, easy and convenient manner by 10 participating financial institutions.
For more information, refer to the Microfinance page.
Microsavings
Long-term contractual microsavings with low committed periodical savings and favourable terms is currently being piloted by financial institutions to inculcate a healthy savings habit, particularly the low income households.
Microinsurance & Microtakaful
Small valued insurance and takaful products which are cost effective, accessible and easy to understand are currently being piloted by some insurers and takaful operators to protect all segments of the society, particularly the low income households against unexpected adverse events.
SME Financing
A holistic SME financing ecosystem was created to provide avenues for SMEs to seek information, advice and redress, as well as assistance through debt resolution and management.
For more information, refer to the SME financing page.
Social Finance
Social finance plays a role in supporting the socioeconomic development of the low-income segment in Malaysia, complementing public sector finance and commercially-driven financial solutions to promote greater social resilience.
For more information, refer to the Social Finance page.
Remittances
Remittance services are provided by banking institutions and non-bank remittance service providers (RSPs) through branches and/or authorised remittance agents. Licensed non-bank RSPs operate in strategic locations nationwide, including rural areas and offer services beyond normal business hours.
Payment Services
Electronic payments (e-payments) play a pivotal role in facilitating a more convenient, secure and cost-effective means of conducting payments over paper-based payment instruments. The benefits of migrating to e-payments are not only limited to financial efficiency gains but also the promotion of an inclusive financial system.
For more information on migration to e-payments initiative, refer to Migration From Paper To Electronic Payments.
Network of Financial Access Points
High accessibility to financial services
A financial access point is a place that provides minimum financial services of accepting deposit and facilitating withdrawal of funds by customers. Financial access points include bank branches, mobile units of the financial institution, deposit and withdrawal electronic terminals and bank agents.
All districts and 96% of sub-districts are served by bank branches and agent banks
For information on Agent Banking, read the box article in our Financial Stability & Payment Systems Report 2012
For more information on bank branches, visit the website of the respective financial institution.
For the list of agent banks appointed by the participating financial institutions, visit the following websites:
Financial Capability & Empowerment
SMEs and general public can obtain information regarding various financial education programmes as well as financial advisory and redress offered by both the Government and private sector via various channels.
Financial Education for Adults
1. MobileLINK
A mobile customer service that provides access to basic banking services to the public in collaboration with financial institutions. MobileLINK also provides:
- Advisory services on banking, insurance and takaful and SME financing related matters;
- Information on personal credit through Central Credit Reference Information System (CCRIS);
- Information on Bank Negara Malaysia through self service web-based terminal made available in the coach; and
- Advisory services on other financial related matters under the purview of Bank Negara Malaysia.
2. Financial Literacy Program
- Collaboration Program for 1Azam (Akhiri Zaman Miskin)
A programme leveraging on 1AZAM platform to enhance the knowledge and capacity of low-income households to utilise financial services responsibly. The programme involves 1AZAM participants and is supported by ministries, NGOs, Agensi Kaunseling dan Pengurusan Kredit (AKPK) and financial institutions. For more information on 1Azam programmes, visit Ministry of Women, Family and Community Development¡¯s website.
- Financial Capability Program by AKPK
- AKPK¡¯s targeted financial capability programmes for adults focus on providing relevant knowledge and skills on money and debt management based on a life-stages approach. For more information, visit AKPK¡¯s website.
- POWER! Programme - specially designed to equip young individuals with essential financial knowledge, providing them with the confidence and ability to make responsible financial decisions. For more information, visit POWER! Online Learning Portal.
Financial Education for School Students
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- Bank Negara Malaysia has ongoing collaboration with the Ministry of Education to inculcate basic financial management as an essential life skill from an early age. Financial education elements are being integrated into the school curriculum.
- Implementation of financial education in school is being supported by activities in co-curriculum via Program Sekolah Angkat, Kelab Kewangan Pelajar Sekolah as well as financial education materials, tools and information such as Buku Wang Saku and financial education workshops for school children.
International Collaboration and Global Participation
On the international front, Bank Negara Malaysia continues to be a strong advocate of inclusive financial development:
Alliance for Financial Inclusion (AFI)
AFI is a policy leadership alliance owned and led by member central banks and financial regulatory institutions from almost 90 emerging and developing countries, with the common objective of advancing financial inclusion.
In collaboration with AFI, BNM undertakes key roles to promote and advocate financial inclusion policies in key policy areas i.e. global standards and proportionate regulation, consumer empowerment and market conduct, financial inclusion data and national strategy, digital financial services, SME finance and inclusive green finance.
ASEAN Working Committee on Financial Inclusion (WC-FINC)
The ASEAN Working Committee on Financial Inclusion (WC-FINC) as endorsed by the ASEAN Finance Ministers and Central Bank Governors Meeting (AFMGM) on 4 April 2016 is mandated to coordinate and implement initiatives to advance financial inclusion in the region.
WC-FINC is also a platform for sharing of country experiences, expertise and information, facilitating member countries to develop or enhance financial inclusion strategies and initiatives at both the national and regional level.
Other collaboration
- Bank Negara Malaysia has partnered with the Irving Fisher Committee on Central Bank Statistics, AFI, OECD and World Bank to organise various capacity building programmes for policymakers globally on financial inclusion.
- Bank Negara Malaysia has also collaborated with Asian Banking School to develop leadership and technical training to microfinance practitioners in the region.
Alliance for Financial Inclusion (AFI)
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AFI is a policy leadership alliance owned and led by member central banks and financial regulatory institutions from almost 90 emerging and developing countries, with the common objective of advancing financial inclusion.
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In collaboration with AFI, Bank Negara Malaysia undertakes key roles to promote and advocate financial inclusion policies in key policy areas i.e. global standards and proportionate regulation, consumer empowerment and market conduct, financial inclusion data and national strategy, digital financial services, SME finance and inclusive green finance.
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Bank Negara Malaysia has also committed a set of measurable financial inclusion commitments to advance the goal of reaching this unbanked people through the Maya Declaration which is the AFI Network¡¯s commitment to financial inclusion.
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Recognising the importance of measurements in translating policies into real impact, Bank Negara Malaysia also adopted the Sasana Accord during the AFI Global Policy Forum 2013 in Kuala Lumpur, and developed a set of key performance indicators and a financial inclusion index to track the progress and estimate the impact of policies in order to intensify the outreach of the financial products and services.
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In May 2015, Bank Negara Malaysia had also collaborated with AFI and the Toronto Centre to host the Global Symposium themed ¡°Towards Proportionality in Practice¡±, culminating in the KL Resolution on Proportionality in Practice. Click here to view the commitments under the KL Resolution.
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During the AFI Global Policy Forum 2015 in Maputo, Mozambique, AFI members adopted the Maputo Accord, which introduces SME finance as a new focus area of the Maya Declaration. As the primary driver of economic growth, employment, innovation, and women¡¯s empowerment in many developing countries, SMEs face major challenges in accessing finance. The Maputo Accord provides a concrete framework for AFI members to make specific commitments to SME finance, reduce regulatory barriers, and accelerate progress on financial inclusion.
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In recognition of Bank Negara Malaysia support and commitment to advance the financial inclusion agenda, AFI awarded Bank Negara Malaysia with several prestigious awards:
- The Best Host Institution in 2014, for hosting the AFI Global Policy Forum 2013 in Sasana Kijang;
- The Maya Declaration Award in 2015, in recognition of Bank Negara Malaysia achievement of financial inclusion targets and most dedicated reporting of measurable targets; and
- The AFI Leadership Award in 2015 and 2017, for being the institution that provided the most leadership in the AFI Network.
ASEAN Working Committee on Financial Inclusion (WC-FINC)
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The ASEAN Working Committee on Financial Inclusion (WC-FINC) as endorsed by the ASEAN Finance Ministers and Central Bank Governors (AFMGM) on 4 April 2016 is mandated to coordinate and implement initiatives to advance financial inclusion in the region. WC-FINC is also a platform for sharing of country experiences, expertise and information, facilitating member countries to develop or enhance financial inclusion strategies and initiatives at both the national and regional level.
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WC-FINC also works closely with international partners, namely AFI, World Bank, United Nations Capital Development Fund (UNCDF) and Organisation of Economic Cooperation and Development (OECD) in providing technical and advisory assistance to enhance the financial infrastructure and ecosystem in ASEAN.
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WC-FINC aspires to advance financial inclusion in the region by focusing on four desired outcomes, namely:
- Supporting national financial inclusion strategy and implementation plan;
- Elevating capacity building of ASEAN member states to enhance financial inclusion ecosystem;
- Promoting innovative financial inclusion via digital platforms; and
- Increasing awareness on financial education and consumer protection.
Achievements
Key Indicators for Financial Inclusion in Malaysia
Measurement Framework
The Bank developed the Financial Inclusion Index, combining both supply-side data from financial institutions and demand-side data through the Financial Inclusion Demand-Side Survey to measure the level of financial inclusion in Malaysia. The Financial Inclusion Index measures the progress and impact of financial inclusion policies, by tracking the four desirable outcomes of i) Convenient accessibility; ii) Take-up rate; iii) Responsible usage; and iv) Satisfaction level.
Malaysia recorded higher Financial Inclusion Index:
- 2019: 0.91 out of 1
- 2011: 0.77 out of 1
Further Reading
Related Articles
- The Role of Alternative Finance to Fund the Needs of a New Economy
- Malaysia Experience in Financial Inclusion: Unlocking Shared Benefits for All through Inclusive Finance
- Raising Financial Inclusion through Agents - Malaysia¡¯s Experience in the Asian Development Bank Financial Inclusion Newsletter
- Unlocking Shared Benefits for All through Inclusive Finance. A box article in the BNM Financial Stability and Payment Systems Report 2015
- Developing the SME Financing Ecosystem
- Malaysia¡¯s Financial Inclusion Framework
- Advancing Inclusive Financial System in the Next Decade in Malaysia
- Developing a Financial Inclusion Index in Central Banking
