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| 06/09/2006 |
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Kuala Lumpur, 6 September – Year-old Perbadanan Insurans Deposit Malaysia (PIDM) is making headways in the global arena by spearheading efforts to internationalize Islamic deposit insurance while enhancing consumer protection at home.
“I’m proud to say that PIDM has made major milestones in its very short history, whether in fulfilling its mandate to protect deposits and contributing towards enhancing Malaysia’s financial system stability or shape itself as an international thought leader in Islamic deposit insurance,” according to Jean Pierre Sabourin, Chief Executive Officer of PIDM, during a briefing to celebrate the first anniversary of Malaysia’s deposit insurance system.
PIDM, or Malaysia Deposit Insurance Corporation (MDIC) as it is known internationally, scored a first recently when it was made an Associate Member of the Islamic Financial Services Board, an international standard-setting body, being the only deposit insurer in the world to be admitted currently.
PIDM will spearhead the establishment of an international committee for Islamic deposit insurance at the International Association of Deposit Insurers (IADI), the global body for deposit insurance organizations. The committee is expected to be established during IADI’s 15th Executive Council Meeting in Kuala Lumpur next week, the first time such a meeting is held in Malaysia.
“With the growing importance of Islamic finance as part of the global financial system, the establishment of an international Islamic deposit insurance committee within IADI will help create guidance and a workable model for other countries wishing to adopt a shariah-compliant deposit insurance system,” said Sabourin, who is also Chair and President of the IADI Executive Council.
In this regard, Malaysia’s deposit insurance system, launched on 1 September 2005, marks another international milestone as it is the first country with both the conventional and Islamic deposit insurance components being administered separately under a single organization. While these international distinctions go beyond PIDM’s mandate, back home, the deposit insurer is actively enhancing consumer protection.
“Deposit insurance is essentially about consumer education and this is why we are developing consumer-centric regulations that would further improve public confidence in the deposit insurance system. An important regulation in the pipeline is an information by-law that would require member institutions to disclose the insurability of deposit products, thereby assuring depositors about which product is insured and which is not” Sabourin said.
Besides such measures, PIDM is actively involved in consumer education by having established a call centre during the first days of its existence and thereafter, a website in four languages as well as training member institutions, which are all licensed commercial and Islamic banks in Malaysia, and educating the general public about the deposit insurance system.
In terms of promoting financial system stability, PIDM complements the supervisory role of the Bank Negara Malaysia (BNM). A Strategic Alliance Agreement was executed on 19 June 2006 between BNM and PIDM for the purpose of coordinating activities, promoting consultation and exchanging information.
As a precursor to its future policies on providing incentives for prudent risk management, PIDM will be hosting an enterprise risk management seminar for financial institutions on 15 September 2006, in conjunction with next week’s IADI Meeting.
This is also an early preparation for member institutions before the adoption of the differential premium system in 2008 that will benefit those with better risk management systems.
One best practice that PIDM embraces is the consultative approach in developing policies that impact the banking sector.
It had recently concluded its consultation with the public on a proposed regulation on disclosure requirements for trust accounts and joint accounts.
In line with developing and implementing best practices for deposit insurance, the statutory body also looks at global standards to enhance its own effectiveness as the administrator of the national deposit insurance system.
PIDM is continuously strengthening its governance and management framework by implementing sound internal policies.
“Currently, we are developing several internal policies and codes, including those on board governance, business conduct and ethics, conflict of interest and whistle blowing, which will further enhance our accountability as a public body,” added Sabourin.
For example, the approved Board Governance Policy at PIDM outlines 15 principles that guide the role of the Board of Directors and how Management is expected to support the Board in fulfilling its duties and responsibilities.
For more information about this press release, kindly contact :
S.Loganathan, General Manager, Communications and Public Affairs Division (Tel : 03-2274 2615)
Zeti Zahariah Zainul, Manager, Communications and Public Affairs Division (Tel : 03-2260 7436 ext 112) |
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