PIDM Is Here To Protect Depositors And Policy Holders

Banks are regarded as unerring institutions. But, in the event of a major financial or economic downturn in a country, banks are vulnerable. Hence, the Asian Financial Crisis in 1997 was the watershed for a deposit insurance scheme to be established in our financial system, including other countries in the region.

Perbadanan Insurans Deposit Malaysia (PIDM) was established in 2005 under the PIDM Act. During the same period, Indonesia and Singapore also set up their deposit insurance systems, followed by Thailand and Brunei. The Philippines and Vietnam established theirs much earlier in 1963 and 2000 respectively. To date, 133 countries have adopted deposit insurance.

PIDM is the Government authority that protects bank deposits in the unlikely event a member bank fails, or goes bankrupt, under the Deposit Insurance System (DIS). A similar protection for takaful certificate and insurance policy, the Takaful and Insurance Benefits Protection System (TIPS), was established five years later in 2010.

In an interview with Business Today, PIDM’s CEO Rafiz Azuan Abdullah shares his views on the workings of the corporation and the journey that lies ahead.

“At PIDM, we ensure your continued access to your deposits and continued protection as provided by your takaful and insurance benefits, in the event of a member institution failure. PIDM’s member institutions are all commercial and Islamic banks, takaful operators and insurance companies in Malaysia,” says Rafiz.

Each depositor is protected up to RM250,000 for each member bank under DIS whereas, TIPS protects owners of takaful certificates and insurance policies from the loss of their takaful/insurance benefits up to RM500,000 per insurer member.

PIDM is also part of a financial safety net together with Bank Negara Malaysia (BNM) but there are significant differences as far as the roles are concerned.

“BNM is the primary supervisor and regulator of the financial system while PIDM protects financial consumers through the administration of DIS and TIPS. Additionally, PIDM is also a resolution authority for member institutions in Malaysia in the unlikely event of a failure,” says Rafiz.