Malaysia Deposit Insurance Corporation (PIDM)

The deposit insurance system in Malaysia was launched in September 2005 and is managed by Perbadanan Insurans Deposit Malaysia (PIDM). PIDM is a Government agency established under the Akta Perbadanan Insurans Deposit Malaysia 2005.

Deposit insurance is a system that protects depositors against the loss of their insured deposits placed with banks in the unlikely event of a bank failure. It is established by the Government to enhance the consumer protection framework and promote financial system stability. It is not related to or managed by general or life insurance companies. Generally, it is a Government sponsored scheme, although in certain countries it is sponsored by the banks.

Benefits to depositors

• Deposit insurance protection is automatic
• PIDM protects depositors holding deposits with banks
• There is no charge to depositors for deposit insurance protection
• Should a bank fail, PIDM will promptly reimburse depositors on their deposits

Benefits to the financial system

• PIDM promotes public confidence in the Malaysian financial system by protecting depositors against the loss of their deposits
• PIDM reinforces and complements the existing regulatory and supervisory framework by providing incentives for sound risk management in the financial system
• PIDM minimises costs to the financial system by finding least cost solutions to resolve troubled banks
• PIDM contributes to the stability of the financial system by dealing with bank failures expeditiously and reimbursing depositors promptly
• With the introduction of a deposit insurance system in Malaysia, depositors receive protection for their deposits under the law. Depositors will know how and when reimbursement of their deposits will be made in the event of a bank failure.

Deposit Insurance Coverage

All types of depositor, whether businesses or individuals, are protected. The maximum limit of coverage under the PIDM Act is RM60,000 per depositor per member institution. This includes both the principal balance of a deposit and the interest/return. The RM60,000 limit provides for 95% of existing depositors to be protected in full. The Malaysian deposit insurance system provides separate coverage for conventional and Islamic deposits.

Types of deposits eligible for protection

• Ringgit denominated deposits that are eligible for protection under the deposit insurance system includes:
• Current and savings deposits
• Fixed deposits
• Investment deposits
• Certified cheques and bank drafts drawn or made against a deposit account

Deposits NOT eligible for protection

Not all monies placed with member institutions are insured by PIDM. Deposits that are NOT eligible for protection are:

• Deposits not payable in Malaysia
• Foreign currency deposits
• Negotiable instruments of deposit (NIDs) and other bearer deposits
• Repurchase agreements
• Money market deposits
• Stocks and bonds
• Unit trusts
• Under the PIDM Act, there is also separate coverage limit of RM60,000 for a depositor who holds a deposit under Islamic accounts, Joint accounts, Trust accounts, Sole proprietorships, Partnerships & Professional practices.

List of Guaranteed Financial Institutions

Deposit in banks and financial institutions that are guaranteed under Government Deposit Guarantee are all the 22 commercial banks and 17 Islamic banks including domestic and locally incorporated foreign banks, all the 15 investment banks, 2 international Islamic bank and 5 deposit-taking development financial institutions.

Commercial Banks

• Affin Bank Berhad
• Alliance Bank Malaysia Berhad
• AmBank (M) Berhad
• Bangkok Bank Berhad
• Bank of America Malaysia Berhad
• Bank of China (Malaysia) Berhad
• Bank of Tokyo-Mitsubishi UFJ (Malaysia) Berhad
• CIMB Bank Berhad (formerly known as Bumiputra-Commerce Bank Berhad)
• Citibank Berhad *
• Deutsche Bank (Malaysia) Berhad
• EON Bank Berhad
• Hong Leong Bank Berhad
• HSBC Bank Malaysia Berhad
• J.P. Morgan Chase Bank Berhad
• Malayan Banking Berhad
• OCBC Bank (Malaysia) Berhad
• Public Bank Berhad
• RHB Bank Berhad
• Standard Chartered Bank Malaysia Berhad
• The Bank of Nova Scotia Berhad
• The Royal Bank of Scotland Berhad (formerly known as ABN AMRO Bank Berhad)
• United Overseas Bank (Malaysia) Berhad

Islamic Banks

• Affin Islamic Bank Berhad
• Alliance Islamic Bank Berhad
• Al Rajhi Banking & Investment Corporation (Malaysia) Berhad
• AmIslamic Bank Berhad
• Asian Finance Bank Berhad
• Bank Islam Malaysia Berhad
• Bank Muamalat Malaysia Berhad
• CIMB Islamic Bank Berhad (formerly known as Commerce Tijari Bank Berhad)
• EONCAP Islamic Bank Berhad
• Hong Leong Islamic Bank Berhad
• Kuwait Finance House (M) Berhad
• Maybank Islamic Berhad
• RHB Islamic Bank Berhad
• HSBC Amanah Malaysia Berhad
• OCBC Al-Amin Bank Berhad
• Public Islamic Bank Berhad
• Standard Chartered Saadiq Berhad

Investment Banks

Affin Investment Bank Berhad

• Alliance Investment Bank Berhad
• AmInvestment Bank Berhad
• Maybank Investment Bank Berhad
• CIMB Investment Bank Berhad
• ECM Libra Investment Bank Berhad
• Hwang-DBS Investment Bank Berhad
• KAF Investment Bank Berhad
• Kenanga Investment Bank Berhad
• MIDF Amanah Investment Bank Berhad
• MIMB Investment Bank Berhad
• OSK Investment Bank Berhad
• Public Investment Bank Berhad
• RHB Investment Bank Berhad
• Hong Leong Investment Bank Berhad

International Islamic Bank

• Unicorn International Islamic Bank Malaysia Berhad
• PT. Bank Syariah Muamalat Indonesia, Tbk

Deposit – Taking Development Financial Institutions

• Bank Pembangunan Malaysia Berhad
• Bank Perusahaan Kecil & Sederhana Malaysia Berhad (SME Bank)
• Bank Kerjasama Rakyat Malaysia Berhad (Bank Rakyat)
• Bank Simpanan Nasional (BSN)
• Bank Pertanian Malaysia Berhad (Agrobank)

With the implementation for the Government Deposit Guarantee on 16 October 2008, PIDM now fully protects all ringgit and foreign currency deposits with commercial, Islamic and investment banks, international Islamic banks and deposit-taking development financial institutions regulated by Bank Negara Malaysia. This is a pre-emptive and precautionary measure, consistent with measures taken by neighbouring jurisdictions, to maintain financial stability. Malaysian banking system is well capitalised and profitable, and it is unlikely that the Guarantee will be called upon.

The Government Deposit Guarantee provides for additional depositor protection over and above that provided by PIDM, and will be in place until 31 December 2010. All types of depositors – whether businesses or individuals holding conventional or Islamic deposits – are fully protected on their eligible deposits.

For more information kindly proceed to PIDM webpage.