How PIDM Protects You

 

1. PIDM PROTECTS DEPOSITS AND TAKAFUL AND INSURANCE BENEFITS

PIDM protects financial consumers in Malaysia via its Deposit Insurance System (DIS) and Takaful and Insurance Benefits Protection System (TIPS), in the event a member institution fails. PIDM’s member institutions consist of member banks and insurer members. This protection is automatic, and financial consumers need not pay a single ‘sen’ for it.

PIDM protects up to RM250,000 per depositor per member bank. There is separate protection for conventional and Islamic deposits held by individuals, joint owners, sole proprietorships, trustees, partnerships and companies. PIDM deposit coverage protects 96% of depositors in full.

For takaful certificate and insurance policy owners, PIDM protects eligible takaful or insurance benefits up to RM500,000. This protection covers 99% of family takaful certificate and life insurance policy owners, and 96% of general takaful certificate and general insurance policy owners, in full. There is separate protection for takaful certificates and insurance policies held by individuals and groups, as well as for own damage and third-party claims.
 

2. PIDM CREATES AWARENESS AND ENHANCES TRUST

PIDM carries out extensive public awareness activities to ensure that consumers are aware that our protection systems exist and understand their benefits and limitations. This is crucial in providing financial consumers with clarity, reassurance and confidence towards these financial protection systems in order to mitigate the risk of runs on our member institutions during situations of stress or uncertainty. Our public awareness and financial literacy efforts also seek to build financial resilience among Malaysians and enhance confidence in our ability to carry out our mandate, including our role as a resolution authority, as we strive to transcend from mere awareness to trust, in the eyes of the public.
 

3. PIDM PROVIDES INCENTIVES FOR MEMBER INSTITUTIONS TO REMAIN SAFE AND SOUND

PIDM supports overall financial stability by promoting the safety and soundness of our member institutions by giving incentives for sound risk management through the Differential Premium System framework for member banks (DPS), the Differential Levy System framework for insurance companies (DLS) and the Differential Levy System framework for takaful operators (DLST). PIDM collects premiums from member banks and levies from insurer members, annually. Member institutions are charged based on their risk profiles under the DPS, DLS and DLST. The better the risk profile, the lower the premiums or levies and vice versa. The premiums and levies collected are on an ex-ante funding mechanism, meaning we collect them from our member institutions in advance, during business as usual.
 

4. PIDM ENSURES MEMBER INSTITUTIONS CAN BE RESOLVED EFFECTIVELY

PIDM, in line with our mandate to ensure prompt and effective resolution that minimises cost to the financial system, embarked on a journey with Bank Negara Malaysia (BNM) to develop a robust Recovery and Resolution Planning (RRP) framework.

RRP consists of recovery planning (RCP) and resolution planning (RSP), two separate but inter-related components aimed at enhancing the supervisability, recoverability and resolvability of financial institutions.

RCP seeks to ensure that financial institutions prepare and maintain a recovery plan that sets out options to restore their financial health back to acceptable levels when under severe stress, while RSP seeks to facilitate a prompt and orderly resolution by enabling the development of a feasible and credible resolution plan for financial institutions during business-as-usual.

PIDM and BNM jointly commenced the RRP initiative for the industry in the year 2017, with BNM leading the RCP process and PIDM leading the RSP process.
 

5. PIDM ENHANCES READINESS FOR CRISIS

At PIDM, our organisational resilience journey is essentially premised on a “just-in-case” concept where we start building organisational resilience to prepare for any eventuality, way before it happens. This can be contrasted with a “just-in-time” approach, where action is taken only as needed. In order to achieve a high state of readiness, PIDM conducts regular crisis simulation exercises, including inter-agency simulation exercises, to enhance coordination among key financial safety net players in Malaysia.

PIDM also continuously works towards enhancing our reimbursement capabilities to ensure that financial consumers will be reimbursed seamlessly and have quicker access to their funds, with minimal inconvenience and disruption, in the event of a member institution failure. In facilitating a prompt and secure reimbursement, PIDM has in place DuitNow as a preferred payment channel in addition to inter-bank transfers and cheque payment.
 
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