| Government Deposit Guarantee |
Q:What is the new guarantee announced by the Ministry of Finance and Bank Negara Malaysia (BNM)?
A:The new guarantee covers the full amount of guaranteed deposits and instruments held in specific banks.
Q: What are the deposits or instruments guaranteed? A: All deposits including:
• Fixed deposits, current accounts, savings accounts, joint accounts and trust accounts
• All Islamic deposits
• Principal guaranteed conventional structured deposits
• Foreign currency deposits
• Negotiable instruments of deposit held by non-banks.
Q: What are the deposits and instruments not guaranteed?
A:
• Conventional structured products that are not principal guaranteed
• Deposits payable outside Malaysia
• Inter-bank money market placements
• Negotiable instruments of deposit held by banks
• Repurchase agreements.
Q: Which banks are guaranteed?
A:
• All the 22 commercial banks and 16 Islamic banks including domestic and locally incorporated foreign banks
• All the 15 investment banks
• 3 international Islamic banks, namely Unicorn International Islamic Bank Malaysia Berhad, PT. Bank Syariah Muamalat Indonesia, Tbk and Al-Rajhi Banking & Investment Corporation
• 5 deposit-taking development financial institutions, namely Bank Pembangunan Malaysia Berhad, Bank Perusahaan Kecil & Sederhana Malaysia Berhad (SME Bank), Bank Simpanan Nasional, Bank Kerjasama Rakyat Malaysia Berhad (Bank Rakyat) and Bank Pertanian Malaysia Berhad (AgroBank).
Q: Are the branches and subsidiaries of domestic banks outside Malaysia guaranteed?
A: No, but they may be guaranteed by a host country’s guarantee or its deposit insurance or protection scheme
Q: I am a non-resident of Malaysia, are my deposits held with banks in Malaysia guaranteed?
A: Yes. Your place of residence or nationality does not matter
Q: Is the guarantee a temporary or permanent measure?
A: The guarantee is a temporary measure and is in place from 16 October 2008 until 31 December 2010.
Q: What is the role of PIDM now?
A: Our role is to administer the Government guarantee and to work with BNM to ensure that our banks and the other guaranteed financial institutions do not engage in excessive risk taking and remain well capitalised. In addition, due to the guarantee, we now have enhanced responsibilities to exercise financial discipline over a larger number of financial institutions, to complement BNM’s supervisory oversight.
Q: Is there going to be a change in premium rates for banks or a fee charged to other financial institutions covered under the guarantee?
A: The existing PIDM differential premium system will remain in force. In addition, there will be a cost for the Government guarantee provided to banks and other guaranteed financial institutions. The details will be communicated later.
Q: Do newly guaranteed financial institutions have to now be members of PIDM and comply with its rules and regulations?
A: No, it is not our intention for them to become members. However, PIDM and BNM will consider additional rules for guaranteed financial institutions to mitigate excessive risk taking.
Q: What happens in January 2011? Will PIDM revert to the RM60,000 limit? And will all the guaranteed banks continue to be guaranteed?
A: The temporary Government guarantee will expire on 31 December 2010. We plan to then revert to the explicit and limited coverage deposit insurance system. PIDM will monitor developments in the banking system and evaluate the need to increase the limit and the scope of coverage at that time.
Q: Why was a temporary guarantee implemented and not an increase to the current deposit insurance limit?
A: The guarantee was implemented consistent with similar pre-emptive and precautionary depositor protection measures implemented in neighbouring jurisdictions to preserve confidence in our respective financial systems.
Q: Is this decision to provide a temporary guarantee due to a deterioration of public confidence in the banking system?
A: No. Confidence of depositors remains intact. The implementation of the guarantee is strictly pre-emptive and in line with similar measures implemented in neighbouring jurisdictions.
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