PIDM Consumer Information - What Is Deposit Insurance

Deposit insurance is a system established by the Government to protect depositors against the loss of their deposits in the event a member institution is unable to meet its obligations to depositors. As an integral component of an effective financial safety net, a deposit insurance system enhances consumer protection by providing explicit protection to depositors.

In Malaysia, the deposit insurance system was brought into effect in September 2005 and is managed by Perbadanan Insurans Deposit Malaysia (PIDM). PIDM is an independent statutory body established under the Malaysia Deposit Insurance Corporation Act 2005 (PIDM Act).

Benefits to depositors

-	PIDM insures depositors holding insured deposits with member institutions
-	Deposit insurance is automatic
-	There are no direct costs to depositors for deposit insurance protection
-	Should a member institution fail, PIDM will promptly reimburse depositors up to the limit of the deposit insurance coverage provided under the PIDM Act

Benefits to the financial system

-	PIDM promotes public confidence in Malaysia’s 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 failing member institutions
-	PIDM contributes to the stability of the financial system by dealing with member institution failures expeditiously and reimbursing depositors as soon as possible