KUALA LUMPUR, April 18: Perbadanan Insurans Deposit Malaysia (PIDM) released its first Annual Report for the four-month period ended 31 December 2005.
The Report reflects PIDM’s objective of being an effective and efficient deposit insurer as well as an exemplary statutory body. Aptly entitled “Building Strong Foundations”, the Report also records PIDM’s objective of meeting the same fiduciary and corporate governance standards as should be expected of its member banks.
PIDM Chief Executive Officer (CEO), Mr Jean Pierre Sabourin, said the adoption of corporate governance standards has been the policy cornerstone since PIDM was formed on August 15 last year.
"PIDM’s foundations will also include sound policies, systems, procedures, internal controls and a transparent accountability regime,” he said.
Sabourin stated the governance framework of PIDM is based on six pillars: - Minister of Finance oversight
- Stringent legislative controls
- Balanced Board of Directors
- Separation of powers
- Sound internal control framework
- Transparency
Minister of Finance Oversight
The PIDM Act provides certain checks and balances in the form of the Minister having oversight of certain key powers, such as setting the annual premium rate charged to member banks.
Stringent Legislative Controls
The law sets limits on, among others, the maximum premium rate, pre-conditions before PIDM can use certain key powers, specific appeal procedures for termination of member banks and payments to depositors under specified conditions.
Balanced Board of Directors
Board members are drawn from both public and private sectors to bring different skills and expertise to fulfill PIDM’s mandate and to take into account the public policy objectives and financial safety net considerations. The private sector directors are appointed by the Minister of Finance. PIDM has three directors from the public sector including the Governor of Bank Negara Malaysia and the Secretary General of the Treasury.
Separation of Powers
PIDM’s policy-making powers and the executive functions are separated. The Board is the “directing mind” with collective responsibility for setting policies and strategic direction, while the CEO is responsible for the day-to-day management of the business and affairs of PIDM. As such, the CEO is not a member of the Board of Directors.
Sound Internal Control Framework
By law, the external auditing function is vested in the Auditor General of Malaysia. In addition, PIDM will establish a strong and independent internal audit function and control to ensure that its operations are conducted according to the highest standards of best professional practices.
Transparency
PIDM submits audited financial statements and its annual report to the Minister for tabling in Parliament. It will also submit quarterly financial results to the Minister.
The Report also discloses the charters of the Audit Committee, Governance Committee and Remuneration Committee. These Charters reflect best international governance practices.
The Annual Report also provides a summary of PIDM’s three-year Corporate Plan and its four business strategies:
- Readiness
- Sound business and financial practices
- Public awareness
- Strong partnerships
Initiatives on building strong foundations for PIDM, budgets and financial projections are available in detail as well.
And, a section on management discussion and analysis gives readers details of PIDM’s main operational initiatives and activities.
Sabourin pointed out that PIDM’s financial statements disclosed substantially more than the minimum requirements expected of Malaysia’s statutory bodies. These disclosures include: - Directors’ Report and Statement by Directors
- Management’s explicit responsibility for preparation of financial statements and the Board’s reliance on Management’s representation
- Management’s enhanced Statutory Declaration
- Disclosure of directors’ remuneration as well as CEO’s salary and benefits
- Financial statements prepared in accordance with approved accounting standards in Malaysia and in accordance with Shariah principles as set out under the Akta Perbadanan Insurans Deposit Malaysia 2005.
Public Awareness
PIDM has been going all-out to raise public awareness on how deposit insurance benefits depositors. Recently, PIDM launched its website – www.pidm.gov.my – and distributed four million info leaflets entitled “Your Deposits are Now Insured” in five languages, including Kadazandusun. PIDM’s call centre is another popular channel for depositors to seek further information on PIDM and deposit insurance matters.
PIDM’s Annual Report is being reproduced in PIDM’s website in four languages – Bahasa Malaysia, English, Chinese and Tamil. PIDM is in the midst of developing a comprehensive multi-year public awareness and educational campaign.
PIDM has trained employees of its member banks on deposit insurance matters and has developed a handbook for easy reference when responding to enquiries from the public. All member banks now display the PIDM membership decals at their branches to indicate their membership in PIDM.
Net Surplus
For the four-month period ended 31 December 2005, PIDM assessed RM35.7 million in premiums, with operating expenses amounting to RM3.3 million, resulting in a net surplus of RM32.5 million.
PIDM administers the Government-backed deposit insurance in Malaysia. We protect depositors – automatically – up to RM60,000 per person per member institution. For further information: |
