Bank Negara Malaysia has reminded Angkatan Koperasi Kebangsaan Malaysia Bhd (Angkasa) to be careful of using the term ‘bank' as the central bank has not given the approval to do so.

A Bank Negara corporate communications officer, who declined to be named, said if Angkasa continued to do so, it would be violating Section 15 of the Banking and Financial Institutions Act 1989.

"We have informed Angkasa about this and it has responded, saying it will be careful not to do so," she said.

Yesterday, the apex body announced that it would set up a cooperative bank by February, having received the approval of the Cooperative Commission of Malaysia.

According to the Bank Negara officer, an organisation would have to put in a formal application to use the term ‘bank'.

However, she said, Angkasa's plan had not come to this stage yet.

Angkasa said it planned to set up a bank with a paid-up capital of RM300 million, provided by the 7,688 cooperatives under its wing.

It would be allowed to invest eight percent, or RM24 million of the paid-up capital, while the other cooperatives could invest anything from RM1,000 to RM12 million.

To date, RM50 million of the capital has been raised for the bank, which will provide personal and housing loans to the 7.9 million cooperative society members under Angkasa, and offer to finance property projects of the member cooperatives.