Why This List Matters If You’re Running a Business in Malaysia

If you’re running a business in Malaysia, opening a company account, applying for financing, or just trying to figure out where to park your savings, you’ll quickly notice how crowded (and honestly, how confusing) the local banking scene can be. Malaysia is unusual among Southeast Asian countries because it runs a genuine dual banking system, where fully Shariah-compliant Islamic banks operate side by side with conventional banks, often under the very same corporate parent. On top of that, the country separates its banks into commercial (retail) banks, investment banks, digital banks, and development financial institutions (DFIs), each with its own licence, regulator relationship, and purpose.

This guide breaks down every category of bank licensed to operate in Malaysia, tells you exactly which banking groups offer both conventional and Islamic banking, and explains in plain language how a retail bank differs from an investment bank, a digital bank, or a DFI. Whether you’re an SME owner comparing loan providers, an entrepreneur deciding where to open a current account, or just a curious reader, this is meant to be the one page you bookmark and keep coming back to.

Why Understanding Malaysia’s Banking Structure Actually Matters

Before jumping into the list, it helps to understand why this distinction matters commercially, not just academically.

• Financing decisions. An SME looking for working capital will normally approach a commercial bank or a DFI like SME Bank or Bank Pembangunan, not an investment bank. Investment banks generally don’t offer everyday business loans.
• Capital raising. A company preparing for a Bursa Malaysia listing, a bond or sukuk issuance, or a merger will work with an investment bank instead of a retail bank.
• Shariah compliance. Business owners who want financing structured on Islamic contracts (think Murabahah, Ijarah, or Musyarakah) for religious, ethical, or contractual reasons need to know which institution actually holds an Islamic banking licence, versus one that simply offers an “Islamic window.”
• Deposit protection. Knowing whether an institution is a member of Perbadanan Insurans Deposit Malaysia (PIDM) affects how safe your deposits are, up to the protected limit, if anything ever goes wrong.
• Digital-first banking. More freelancers, gig workers, and micro-enterprises are turning to Malaysia’s five licensed digital banks for lower fees and faster onboarding, though each one has different strengths and limits compared to traditional branches.

With that context in mind, here’s how Bank Negara Malaysia (BNM), the country’s central bank and chief banking regulator, actually categorises the institutions it licenses.

The Regulatory Backbone: BNM, PIDM, and the Two Governing Acts

Every bank in Malaysia is licensed and supervised by Bank Negara Malaysia (BNM). Two pieces of legislation sit underneath the whole system:

1. Financial Services Act 2013 (FSA 2013), which governs conventional commercial banks, investment banks, and other financial institutions.
2. Islamic Financial Services Act 2013 (IFSA 2013), which governs fully-fledged Islamic banks and the Islamic banking windows run by conventional institutions.

A third law, the Development Financial Institutions Act 2002 (DFIA 2002), governs the six government-linked development banks that serve strategic economic sectors rather than the general public.

Nearly all licensed commercial banks and licensed Islamic banks are members of Perbadanan Insurans Deposit Malaysia (PIDM), the statutory deposit insurer. PIDM protects eligible deposits up to RM250,000 per depositor per member bank under its Deposit Insurance System (DIS), and does the same for Islamic and takaful products through the Takaful and Insurance Benefits Protection System (TIPS) (PIDM).

The Four Main Types of Banks in Malaysia

1. Commercial (Retail) Banks

Commercial banks, often just called “retail banks,” are the ones most Malaysians deal with every day: Maybank, CIMB, Public Bank, and the rest. Licensed under the FSA 2013, they offer the full suite of everyday banking services:

• Savings and current accounts
• Fixed deposits
• Personal and housing loans
• Credit and debit cards
• SME and corporate business loans
• Trade finance and treasury services for larger businesses

Commercial banks run extensive branch networks and ATM infrastructure, and they’re the main channel for both individual consumers and small-to-medium enterprises needing day-to-day banking and financing.

2. Investment Banks

Investment banks in Malaysia are a completely different animal from retail banks, even though several of them share a parent group. Maybank Investment Bank, for example, sits under the same Maybank Group as Maybank’s retail banking arm. Investment banks are licensed under the FSA 2013 too, but they focus on capital markets and corporate advisory work rather than everyday deposits and loans:

• Underwriting share and bond issuances (IPOs, rights issues, sukuk)
• Mergers and acquisitions (M&A) advisory
• Corporate finance and restructuring advisory
• Stockbroking and securities dealing
• Fund and asset management (in some cases)
• Proprietary trading and treasury for institutional clients

Investment banks in Malaysia are dually regulated: BNM handles prudential (financial soundness) supervision, while the Securities Commission Malaysia (SC) regulates capital markets conduct. So if you’re a business owner planning to raise institutional capital, list on Bursa Malaysia, or issue a sukuk, an investment bank, not your everyday retail bank, is the institution you actually need to engage.

3. Islamic Banks

Islamic banks operate on Shariah-compliant principles, meaning every product avoids riba (interest), gharar (excessive uncertainty), and non-halal underlying activities. Instead of conventional loans, Islamic banks use contracts such as:

• Murabahah (cost-plus sale financing)
• Musyarakah / Mudarabah (profit-and-loss sharing partnerships)
• Ijarah (leasing)
• Tawarruq (commodity-based financing, widely used for personal and SME financing)
• Wakalah (agency-based investment accounts)

Islamic banks in Malaysia fall into two structural categories:

• Fully-fledged Islamic banks are separately incorporated subsidiaries with their own banking licence under IFSA 2013, such as Maybank Islamic Berhad or CIMB Islamic Bank Berhad. These are distinct legal entities from their conventional parent, with their own capital, balance sheet, and Shariah Committee.
• Islamic banking windows are a facility offered by a conventional bank (often a foreign bank that doesn’t have a separate Islamic subsidiary) to sell Shariah-compliant products under the Skim Perbankan Islam (SPI), without a separately licensed Islamic entity behind it.

Malaysia’s Islamic finance industry is one of the most developed in the world, with Islamic banking assets making up roughly a quarter of the country’s total banking system assets (Sharia Banking).

4. Digital Banks

Since 2022, BNM has issued five digital banking licences to consortiums that combine technology and financial expertise. These are branchless, app-only banks built to serve underbanked segments like freelancers, gig workers, and small businesses who find traditional branch banking cumbersome:

• GX Bank Berhad (conventional, FSA licence), led by a Grab-backed consortium, launched November 2023
• Boost Bank Berhad (conventional, FSA licence), led by Boost (Axiata) and RHB Bank Berhad, launched January 2024
• AEON Bank (M) Berhad (Islamic, IFSA licence), Malaysia’s first Islamic digital bank, led by AEON Financial Service and AEON Credit Service, launched May 2024
• KAF Digital Bank Berhad (Islamic, IFSA licence), led by KAF Investment Bank and focused heavily on SME and business banking, launched August 2025
• YTL Digital Bank Berhad, operating as Ryt Bank (conventional, FSA licence), a YTL and Sea Limited joint venture, launched August 2025

All five digital banks are PIDM members, so eligible deposits enjoy the same statutory protection as traditional banks (PIDM; The Edge Malaysia).

5. Development Financial Institutions (DFIs)

DFIs are government-owned institutions set up to plug the financing gaps that commercial banks tend to avoid: agriculture, exports, SMEs, cooperatives, and national savings. There are six DFIs prescribed under the DFIA 2002, all regulated by BNM:

1. Bank Pembangunan Malaysia Berhad, focused on infrastructure, maritime, and strategic sector financing
2. Bank Perusahaan Kecil & Sederhana Malaysia Berhad (SME Bank), dedicated to SME financing and development
3. Export-Import Bank of Malaysia Berhad (EXIM Bank), handling trade finance and export credit
4. Bank Kerjasama Rakyat Malaysia Berhad (Bank Rakyat), offering cooperative and Islamic retail banking
5. Bank Simpanan Nasional (BSN), the national savings bank with a large retail footprint
6. Bank Pertanian Malaysia Berhad (Agrobank), focused on agriculture-sector financing

A few DFIs, including Bank Rakyat and Agrobank, have fully converted to Islamic operations, while others like BSN, SME Bank, Bank Pembangunan, and EXIM Bank run substantial Islamic banking windows alongside their conventional business (IIUM Institutional Repository; The Edge Malaysia).

Full List of Commercial Banks in Malaysia

Domestic Commercial Banks

All eight of Malaysia’s homegrown banking groups run a separately licensed, fully-fledged Islamic banking subsidiary. This “dual-bank” structure lets each group serve conventional and Shariah-compliant customers under one brand while keeping the two balance sheets and Shariah governance completely separate, as required by IFSA 2013.

Foreign-Owned Commercial Banks Operating in Malaysia

A handful of foreign banks, namely HSBC, Standard Chartered, and OCBC, went a step further and set up a separately licensed Islamic bank rather than just a window. These are three of the five foreign-owned Islamic subsidiaries covered in the next section.

Source for the full, current PIDM-covered list: PIDM Member Banks.

Full List of Islamic Banks in Malaysia

Malaysia has 16 fully-fledged Islamic banks licensed under IFSA 2013, split between domestic banking-group subsidiaries and foreign-owned standalone Islamic banks, plus two Islamic digital banks. That’s 18 licensed Islamic banking entities in total.

Domestic Islamic Bank Subsidiaries

1. Maybank Islamic Berhad, the largest Islamic bank in ASEAN by assets, operating under Maybank Group
2. Bank Islam Malaysia Berhad, Malaysia’s first Islamic bank, established in 1983
3. Bank Muamalat Malaysia Berhad, the country’s second fully-fledged Islamic bank, established in 1999
4. CIMB Islamic Bank Berhad, CIMB Group’s regional Islamic banking arm
5. RHB Islamic Bank Berhad, RHB Group’s Islamic franchise
6. Public Islamic Bank Berhad, Public Bank Group’s Islamic subsidiary
7. Hong Leong Islamic Bank Berhad, Hong Leong Financial Group’s Islamic arm
8. Affin Islamic Bank Berhad, Affin Bank Group’s Islamic subsidiary
9. Alliance Islamic Bank Berhad, Alliance Bank’s Islamic subsidiary, with a strong SME focus
10. AmBank Islamic Berhad, AmBank Group’s Islamic subsidiary
11. MBSB Bank Berhad, formed from the 2018 merger of Malaysia Building Society Berhad and Asian Finance Bank, now a full-fledged Islamic bank

Foreign-Owned Islamic Banks

12. Al Rajhi Banking & Investment Corporation (Malaysia) Berhad, a subsidiary of Saudi Arabia’s Al Rajhi Bank
13. HSBC Amanah Malaysia Berhad, HSBC’s standalone Malaysian Islamic bank since 2008
14. Kuwait Finance House (Malaysia) Berhad, a subsidiary of Kuwait Finance House Group
15. OCBC Al-Amin Bank Berhad, OCBC Singapore’s Malaysian Islamic banking subsidiary
16. Standard Chartered Saadiq Berhad, Standard Chartered’s dedicated Malaysian Islamic bank

Islamic Digital Banks

17. AEON Bank (M) Berhad, Malaysia’s first Islamic digital bank, launched May 2024
18. KAF Digital Bank Berhad, an Islamic digital bank focused on SME and business banking, launched August 2025

Sources: Sharia Banking directory; PIDM Member Banks.

Full List of Investment Banks in Malaysia

As of 2026, Malaysia has 10 licensed investment banks, all domestically controlled and dually regulated by BNM and the Securities Commission Malaysia. Alliance Investment Bank Berhad surrendered its investment banking licence to BNM in December 2023 after disposing of its stockbroking and capital markets business, which brought the count down from the historical 11 (Alliance Bank Malaysia).

1. Affin Hwang Investment Bank Berhad
2. AmInvestment Bank Berhad
3. CIMB Investment Bank Berhad
4. Hong Leong Investment Bank Berhad
5. KAF Investment Bank Berhad
6. Kenanga Investment Bank Berhad
7. Maybank Investment Bank Berhad
8. MBSB Investment Bank Berhad (formerly MIDF Amanah Investment Bank Berhad, following MIDF’s merger with MBSB)
9. Public Investment Bank Berhad
10. RHB Investment Bank Berhad

Several of these, including CIMB Investment Bank, Maybank Investment Bank, Kenanga Investment Bank, and KAF Investment Bank, are approved to operate Islamic banking windows for Shariah-compliant capital markets transactions such as sukuk issuance (BNM Financial Sector Participants Directory).

Full List of Digital Banks in Malaysia

All five were awarded their licences by BNM in April 2022, following approval from the Ministry of Finance, and all had launched to the public by August 2025 (Skrine; The Edge Malaysia).

Full List of Development Financial Institutions in Malaysia

Source: The Edge Malaysia; IIUM Institutional Repository.

Conventional vs Islamic Banking: Key Differences at a Glance

One thing worth knowing: Islamic banking products in Malaysia are open to everyone, regardless of religion. Plenty of non-Muslim customers choose Islamic financing simply because the profit-rate structure or a specific product feature suits them better.

Retail Bank vs Investment Bank vs Islamic Bank vs DFI: A Quick Reference for Business Owners

It’s worth flagging a related but separate category too: Labuan banks and Labuan investment banks. These are licensed under the Labuan Financial Services and Securities Act 2010 and regulated by the Labuan Financial Services Authority (Labuan FSA) rather than BNM directly. They operate from the Labuan International Business and Financial Centre and mostly serve offshore, cross-border corporate clients rather than the domestic retail or SME market, which makes them a useful option if you’re structuring a regional or international holding arrangement.

Frequently Asked Questions

Is my money safe if I deposit with an Islamic bank instead of a conventional bank?
Yes. Islamic banks that are PIDM members are protected under the Takaful and Insurance Benefits Protection System (TIPS), which mirrors the protection conventional depositors get under the Deposit Insurance System (DIS), up to RM250,000 per depositor per bank.

Can a non-Muslim open an account or take financing from an Islamic bank in Malaysia?
Absolutely. Islamic banking in Malaysia is open to everyone. Plenty of non-Muslim customers and businesses use Islamic financing products because of their transparent profit-rate structures or particular contractual features.

What’s the difference between a “fully-fledged Islamic bank” and an “Islamic banking window”?
A fully-fledged Islamic bank is a separately incorporated entity with its own licence under IFSA 2013. Maybank Islamic Berhad, for example, is legally distinct from Maybank itself. An Islamic banking window, on the other hand, is a facility inside a conventional bank (often used by foreign banks that don’t have a separate Islamic subsidiary) offering Shariah-compliant products without a standalone Islamic banking entity behind it.

Which bank should an SME approach first for financing?
Start with your existing commercial bank relationship, or a DFI relevant to your sector: SME Bank for general SME needs, Agrobank for agriculture, EXIM Bank if you’re an exporter. If you want Shariah-compliant financing, ask specifically for products from the Islamic banking subsidiary rather than assuming the conventional arm offers the same terms.

Do digital banks offer business accounts?
Some do. KAF Digital Bank, for instance, has positioned itself specifically around SME and business banking, while GX Bank, Boost Bank, AEON Bank, and Ryt Bank currently focus mainly on retail consumers, though business-facing features are expanding across the industry.

Are all commercial banks in Malaysia required to offer Islamic banking?
No. While all eight domestic banking groups run a fully-fledged Islamic subsidiary, several foreign banks operate purely conventional business or offer only a limited Islamic window rather than a separately licensed Islamic bank.

Final Thoughts

Malaysia’s banking system is genuinely one of the most structurally diverse in the region. Eight domestic banking groups each run parallel conventional and Islamic operations, more than a dozen foreign banks (some with their own Islamic subsidiaries) operate alongside them, 10 investment banks focus purely on capital markets, five app-only digital banks split between conventional and Islamic licences, and six government-backed development banks target strategic sectors.

For Malaysian business owners and entrepreneurs, the practical takeaway is simple: match the type of bank to the type of need. Your retail banking relationship handles everyday cash flow. Investment banks only come into play once you’re raising serious capital. DFIs are worth exploring for sector-specific concessionary financing. And if Shariah compliance matters to you or your customers, check specifically whether you’re dealing with a fully-fledged Islamic banking entity or just a conventional bank’s Islamic window.

Bookmark this list. As Bank Negara Malaysia continues expanding digital banking licences, and as more institutions convert or grow their Islamic banking operations, we’ll keep this page updated with the latest changes to Malaysia’s banking landscape.

Sources: Bank Negara Malaysia Financial Sector Participants Directory, PIDM Member Banks, Sharia Banking, MIDA: Navigating Malaysia’s Banking, Financing and Foreign Exchange Administration Policies, The Edge Malaysia, Skrine, Alliance Bank Malaysia.