Kuala Lumpur, 13 December 2017: Perbadanan Insurans Deposit Malaysia (PIDM) recently revised the Differential Premium Systems (DPS) framework for the Deposit Insurance System, effective from assessment year 2018.
The DPS framework, which provides a framework to determine differential premium rates to be paid by member banks, has been revised to introduce new indicators in respect of member banks’ funding profiles. The “loans to available funds” ratio and “composition of core funds” indicator replaces the “loans to deposits” ratio and the “composition of individual depositors” indicator, respectively.
“These new indicators recognise a wider range of instruments that are regarded as stable funds, in line with regulatory and funding developments. Member banks that support their business with funding sources from deposits and debt instruments will benefit from the “loans to available funds” ratio. Additionally, the “composition of core funds” indicator provides incentives to member banks with high composition of stable funding sources,” said Rafiz Azuan Abdullah, Chief Executive Officer of PIDM.
Implemented in 2008, the DPS framework incentivises member banks to improve their risk profiles and ensures fairness among member banks. The better the risk profile of a member bank, the lower its applicable premium rate. PIDM reviews the DPS framework from time to time to ensure it remains current and relevant given a continuously evolving operating environment. The last review was carried out in 2015.
“Over time, banks have increasingly diversified their funding sources. Apart from traditional deposits, long-term debt instruments are gaining prominence as a source of stable funding, given the recognition under Basel III’s liquidity standards and advancements in Malaysia’s capital market. The revision to the DPS framework is timely to reflect such developments,” added Rafiz.
The revised DPS framework is effective beginning assessment year 2018. As such, the assessment of the indicators under the revised DPS framework will be based on member banks’ positions as at 31 December 2017.
PIDM also announced that the Malaysia Deposit Insurance Corporation (Terms and Conditions of Membership) (Amendment) Regulations 2017 has been gazetted and came into effect on 2 November 2017. The terms and conditions of membership sets out the obligations and responsibilities of PIDM’s member institutions.
The enhanced terms and conditions of membership include, among others, compliance with prudential and Shariah standards, proper maintenance of records, additional information requirements, and timeliness of notification to PIDM by member institutions of any event that may undermine its safety and soundness.
The revised DPS framework and T&C Regulations 2017 can be downloaded from PIDM’s website at www.pidm.gov.my.
For more information about this press release, kindly contact:
Sarina Ariffin, Acting General Manager, Communications and Public Affairs Division
(Tel: 03-2173 7457; 012 – 347 5014; Email: firstname.lastname@example.org)
Mimi Faizura Mohd Rashid, Senior Manager, Communications and Public Affairs Division
(Tel: 03-2173 7570; Email: email@example.com)
PIDM is a statutory body that provides protection against the loss of deposit and insurance or takaful benefits with its member institutions in the event of a failure. PIDM is entirely funded by premiums or levies assessed on its member institutions and does not receive public funds to operate. It has the means under the PIDM Act to borrow or raise such funds as may be needed to fulfil its statutory obligations to protect financial consumers of its member institutions. As an integral part of the national financial safety net, PIDM promotes and contributes to the stability of the financial system.
For further information:
Call 1-800-88-1266, 8.30am to 5.30pm on Mondays to Fridays (excluding public holidays)
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.