Perbadanan Insurans Deposit Malaysia (PIDM)

New laws passed under the Perbadanan Insurans Deposit Malaysia Act, 2005

For those of you who's not working in a Bank or may not be aware of this new new which was already passed by Parliament, thought I'd brief all of you, as I had attended the PIDM briefing last month. This definitely should be of interest to all of us.

What does this law basically say ?

That PIDM will insure all deposits of customers with each Financial Institution (FI), in the event that the Financial Institution fails to continue it's operations in any form. The Government or Bank Negara Malaysia no longer guarantees such deposits, as in the case of the financial crisis we faced many years back. The insurance amount needs to be paid by each FI to PIDM, whereby such costs are not supposed to be absorbed by the customers (but do you seriously believe this can be monitored). Each FI has already started paying, starting with coverage for Oct 1 2005 to Dec 31 2005, whereby each has already paid a minimal amount of RM 250,000 by end September 2005.

What will happen if any FI fails ?

PIDM will pay the depositor the total amount of 'deposits' (explained below) he or she has with the FI, for each 'customer entity' (explained below), subject to maximum amount of RM 60,000.

What are the 'deposits' covered ?

Currently, coverage is only for the convential products, i.e. fixed deposits, savings accounts and current accounts. Next year, they intend to expand into other kinds of customer-based liabilities of each FI including unit trusts, uncleared cheques, etc.

What is the definition of each 'customer entity' ? (for each of which there's a separate coverage of up to RM 60,000 in each FI)

Total balances of your savings accounts, fixed deposits, current accounts which are in your name only - 1 'customer entity'.

Total balances of your savings accounts, fixed deposits, current accounts which are jointly in your name and your spouse - 1 more 'customer entity'

Total balances of your savings accounts, fixed deposits, current accounts which are jointly in your name and parents - 1 more 'customer entity'

Total balances of your child's junior savings accounts, where he or she is the beneficiary and you are the trustee for the account - separate 'customer entity' for each and every child or beneficiary , for whom you are the trustee.

If you need any firther information on this, you may contact the undersigned.

Ong Chin Kee

(O) 03-20348173
(R) 03-90750268
016-3403793