Source: http://www.bnm.gov.my/index.php?ch=8&pg=14&ac=1081

Deposit Insurance System Introduced For Enhanced Consumer Protection
Toll Free Number for public enquiry : 1 800 88 1266

Bank Negara Malaysia wishes to announce that The Minister of Finance today approved the introduction of a deposit insurance system for Malaysia. The approval follows the Malaysia Deposit Insurance Corporation Act that was passed in Parliament on 26 July 2005 and gazetted on 11 August 2005. The system will further strengthen the consumer protection infrastructure and represents another significant step forward in the ongoing development on the Malaysian financial system. The deposit insurance system will strengthen incentives for financial institutions to adopt sound financial and business practices and enhance public confidence in the financial system by providing explicit protection of deposits.

Under the deposit insurance system, eligible deposits will be insured up to the prescribed limit of RM60,000 per depositor, per member institution inclusive of principal and interest. There will also be a separate coverage of RM60,000 per depositor, per member institution for Islamic deposits, accounts held under joint ownership and trust accounts, sole proprietorship and partnerships. This will provide coverage to 95% of depositors in full.

Bank Negara Malaysia wishes to announce that the Minister of Finance has approved the establishment of an independent statutory body called Perbadanan Insurans Deposit Malaysia (PIDM) to administer the deposit insurance system. PIDM was established on August 15, 2005 with the enactment of the Malaysia Deposit Insurance Corporation Act 2005. Among others, PIDM's mandate is to provide insurance against loss of part or all deposits; provide incentives for sound risk management in the financial industry and to promote and contribute to the stability of the financial system. In meeting its objectives, PIDM is required to act in a manner to minimise the costs to the financial system.

PIDM will also have the role, in certain circumstance; to undertake the resolution of banking institutions, as may be required based on the assessment of Bank Negara Malaysia.

PIDM will have a seven-member Board, with balanced representation from the public and private sector. Members of the Board of Directors of PIDM as approved by the Minister of Finance are; Tan Sri Dato' Abdul Aziz bin Taha (Chairman), Tan Sri Dato' Sri Dr. Zeti Akhtar Aziz, Dato' Izzuddin bin Dali, Tan Sri Dato' Seri Muhammad Azmi bin Kamarudin, Datuk Dr. Abdul Samad bin Haji Alias, Datuk Dr. Sulaiman Mahbob and Encik Michael Wong Kuan Lee. The Minister of Finance, on the recommendation of the Board, approved the appointment of Mr. Jean Pierre Sabourin as the Chief Executive Officer of PIDM.

As mandated under the Act, all commercial banks (including subsidiaries of foreign banks operating in Malaysia) and finance companies licensed under the Banking and Financial Institutions Act 1989, and Islamic banks licensed under the Islamic Banking Act 1983 will be members of the deposit insurance system effective September 1, 2005. Member of the public are hereby informed that all eligible deposits will be covered up to the prescribed limit of RM60,000 per depositor, per member institution from today.

Bank Negara Malaysia in its role of ensuring monetary and financial stability will remain the primary regulator and supervisor of the banking system. PIDM will complement Bank Negara Malaysia through the administration of an effective deposit insurance system in a manner that provides incentives for sound risk management in financial institutions.

Explicit deposit insurance systems exist in more than 80 countries around the world including the USA, Canada, Taiwan, Japan, Germany, Indonesia and Hong Kong. In developing the design features of the Malaysian deposit insurance system, consideration was taken to ensure that the system is efficient, effective and equitable.

 
Bank Negara Malaysia
1 September 2005

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