The deposit insurance limit will be increased to RM250,000 per depositor per bank with effect from Friday, Dec 31, 2010 and this will protect 99% of retail depositors in full.
The Malaysia Deposit Insurance Corporation or better known as Perbadanan Insurans Deposit Malaysia (PIDM) said on Thursday, Dec 30 the PIDM Bill 2010 comes into operation on Friday.
The Bill was approved by the Dewan Rakyat and Dewan Negara in the recent Parliamentary sitting.
“Under the enhanced financial consumer protection package, the limit will protect 99% of retail depositors in full. Under the new Bill, foreign currency deposits will now enjoy deposit insurance protection,” it said.
On May 11, 2010, Prime Minister Datuk Seri Mohd Najib Razak, who is also Finance Minister, announced the increase of the deposit insurance limit to RM250,000 by Jan 1, 2011 and the government’s intention to bring forward legislation to enable the increase to be implemented.
PIDM said the enhanced financial consumer protection package included the expansion of PIDM’s mandate to include the administration of the Takaful and Insurance Benefits Protection System (TIPS).
TIPS is an explicit, limited Government protection system which covers takaful and insurance benefits and will be administered broadly along the same approach as provided for in the current deposit insurance system.
Licensed insurance companies and registered takaful operators would automatically become member institutions of PIDM.
The Bill would empower PIDM to intervene in or resolve troubled insurer members and ensure prompt payments to claimants under the policies or takaful certificates protected under TIPS.
The Bill, when enacted, will replace the PIDM Act 2005, and would widen PIDM’s mandate, roles and responsibilities to fulfil its mandate to protect depositors in the event of a member institution failure.
PIDM is the government agency mandated by Parliament to protect depositors against the loss of their funds in the event of a member bank failure.
Member banks comprise all commercial and Islamic banks, including locally incorporated foreign banks, in Malaysia. - by Joseph Chin of theedgemalaysia.com
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