Financial Glossary



Participating Financial Institution - Financial institutions appointed by Bank Negara Malaysia as intermediary for special funds.

Payee - The person to whom the cheque is to be paid to.

PIN - Personal Identification Number – A sequence of digits used to verify the identity of the cardholder. It is a kind of password.

Post-dated Cheque - A cheque written with a future date.

Power of Attorney - A formal legal document giving authority to one person to act on behalf of another person.

Prepayment - Payment of all or part of a loan before maturity.

Prepayment Penalty - A fee charged by financial institutions for early payment of loan in full. The fee charged is usually based on a percentage of the loan amount or "X" months of interest.

Principal - The amount borrowed from financial institutions, excluding interest and other charges.

Principal or Purchase Price - The amount of financing from the Islamic banking institution or the purchase price of the property by the Islamic banking institution from a customer, excluding profit margin and other charges.

Processing Fee - One time fee charged by banking institutions for loan processing. This fee is levied based on the loan amount.

Profit Margin - The amount charged by the Islamic banking institution to the customer for the use of the fund during the tenure of financing.

Property - Refers to landed properties (like house, apartment, condominium) and land (like bungalow lots).

Property Purchase Agreement - A written contract signed between the Islamic banking institution and the customer, expressing the sale of the property by the Islamic banking institution to the customer. It contains major provisions such as the selling price, terms of payments and financing, and the duties, rights and remedies of each party.

Purchases - Amount incurred on purchase of merchandise or services.


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