* Eligible for protection by PIDM
Deposit insurance is a system established by the Government to protect depositors against the loss of their insured deposits placed with member institutions in the event the member institution fails. Commercial and Islamic banks that are member institutions of PIDM are also referred to as ‘member banks’.
As an integral component of an effective financial safety net, a deposit insurance system enhances consumer protection by providing explicit protection to depositors. Depositors will know when, how much and how their deposits are insured in the event that a member institution fails or is unable to make payment to depositors. In Malaysia, the deposit insurance system was brought into effect in September 2005 and is administered by Perbadanan Insurans Deposit Malaysia (PIDM).
Deposit insurance is recognised internationally as an important form of consumer protection and has been implemented in over 100 countries around the world, with the earliest system dating back to 1930s. All types of depositors, whether businesses or individuals, are protected.
The maximum limit of coverage is RM250,000 per depositor per member institution. This includes both the principal amount of a deposit and the interest/return. The RM250,000 limit provides for 99% of existing depositors to be protected in full. The Malaysian deposit insurance system provides separate coverage for conventional and Islamic deposits.