Kuala Lumpur, 8 May 2008: Perbadanan Insurans Deposit Malaysia (PIDM)’s Differential Premium Systems Regulations is a major incentive by the national deposit insurer to promote sound risk management practices within its member banks by assessing premiums according to their individual risk profile.
“In line with PIDM’s mandate to promote financial system stability, the incentives under the Differential Premium Systems (DPS) encourage banks to improve their risk profiles and also introduces more fairness into the premium assessment process,” said Jean Pierre Sabourin, Chief Executive Officer of PIDM.
In previous years, all member banks paid the same premium rate of 0.06% of total insured deposits.
Starting in 2008, premiums will now be assessed based on the category that a member bank falls into. There are four categories, ranging from 1 (highest score) to 4 (lowest score). Under premium category 1, the premium rate is set at 0.03%, category 2 (0.06%), category 3 (0.12%) and category 4 (0.24%) of total insured deposits.
However, for implementation in 2008, PIDM has provided for a transitional period of one year whereby banks’ scores will be adjusted upwards by 20% and member banks which fall into category 4 will pay premiums based on the same rate charged for category 3. This is to allow banks a sufficient time to adjust to the new system.
PIDM will notify its member banks on their scoring, premium category and rate by 15 May and premiums payment must be submitted to PIDM by 31 May each year. The rate is based on the total insured deposits as at 31 December of the preceding year.
Developed over two years, PIDM is the first deposit insurer in the ASEAN region to establish a DPS based on international best practices and customized to the Malaysian banking system.
“The DPS considers the different business models of conventional banking and Islamic banking while maintaining the principle that it should apply equitably to all members irrespective of size or complexity of their businesses. It is quite a robust framework that takes into account the uniqueness of Malaysia’s dual banking system,” elaborated Sabourin.
Malaysia’s DPS was designed based on studies of established DPS around the globe and developed in consultation with Bank Negara Malaysia, all member banks and other interested parties.
The DPS Regulations and the Premium Order is available for reference in PIDM’s website at this link.
For more information about this press release, kindly contact :
S.Loganathan, General Manager, Communications and Public Affairs Division
(Tel : 03-2173 7455)
Zeti Zahariah Zainul, Manager, Communications and Public Affairs Division
(Tel : 03-2173 7457)
PIDM administers the Government-backed deposit insurance in Malaysia. We protect depositors – automatically – up to RM60,000 per depositor per member institution. For further information:
PIDM protects your deposits in the bank as well as your takaful and insurance benefits in the unlikely event of a failure of a member bank or a takaful operator / insurance company.