What is PIDM (Perbadanan Insurans Deposit Malaysia)?

Perbadanan Insurans Deposit Malaysia (PIDM) or known internationally as Malaysia Deposit Insurance Corporation (MDIC) is a government body that administers and insures all deposits and insurance policies (including takaful certificates).

These protections are provided by PIDM automatically and no application is required. Both protections are provided free of charge.

PIDM on its website states that the body is an integral part of the national financial safety net and

PIDM has wide-ranging powers to promote and contribute to the stability of the financial system, to provide incentives for sound risk management in the financial system, to intervene in and resolve troubled member institutions and to act in the best interests of depositors and policy owners.

Below are some information of the two protections.

 

1. Deposit Insurance System

PIDM through this system protects bank deposits and will promptly reimburse depositors on the insured deposits should a member bank fail. All types of depositors, whether businesses or individuals, are protected.

The maximum limit of coverage is RM250,000 per depositor per member institution. This coverage includes both the principal amount of a deposit and the interest/return.  The deposit insurance system provides separate coverage for conventional and Islamic deposits.

Who are the member institutions?

Below are the type of institutions that are required by law (as provided under the Akta Perbadanan Insurans Deposit Malaysia) to be members of PIDM.

• All commercial banks licensed under the Banking and Financial Institutions Act 1989 (BAFIA).
• All Islamic banks licensed under the Islamic Banking Act 1983 (IBA).
• All foreign banks operating in Malaysia.

The institutions below are not members of PIDM:

• Investment banks
• Overseas branches of domestic banking institutions
• Development financial institutions
• All non-bank financial intermediaries such as provident and pension funds, cooperative societies, housing credit institutions and building societies which are not supervised or regulated by BNM

 

2. Takaful and Insurance Benefits Protection System (TIPS)

Protects owners of takaful certificates and insurance policies from the loss of their eligible takaful or insurance benefits, should an insurer member fail.

In general the coverage limit for takaful or insurance benefit is set at RM500,000. Coverage tables on PIDM’s website provide the details of the coverage.

Who are the insurer members?

Currently the institutions below are required by law(as provided under Akta Perbadanan Insurans Deposit Malaysia) to join PIDM as members:

• All takaful operators licensed under the Takaful Act 1984 to conduct family and/or general takaful business in Malaysia.
• Insurance companies licensed under the Insurance Act 1996 to conduct life and /or general insurance business in Malaysia. 

The institutions below are not members of PIDM:

• Reinsurance and retakaful companies
• Captive insurers and specialist insurers
• Offshore insurance companies
• International takaful operators licensed under the Takaful Act 1984
  Other players in the insurance industry, such as insurance brokers, insurance adjusters and insurance agents