Most Malaysians may not realise there is a safety net quietly protecting their hard-earned savings in the bank. - Photo from 123rf.com
WHEN was the last time you doubted whether your money would be there when you needed it? For most Malaysians, the idea now seems unimaginable.
Every day, millions of payments are processed and transfers move smoothly across banks.
This reliability has become so normal that it is almost hard to imagine a time when these services might not be available, even more so when no bank in Malaysia has ever failed.
The reality is that financial systems are not infallible. Around the world, bank failures have caused panic withdrawals, shaken confidence and disrupted lives. Malaysia has been fortunate to avoid such crises, but that does not mean the risks don’t exist.
Luckily Malaysians have no need to worry because behind this everyday reliability lies an unseen safety net, one designed to keep money safe and accessible, even in uncertain times.
The invisible, ever-present safety net
One of these safeguards is Perbadanan Insurans Deposit Malaysia (PIDM), a government authority that protects depositors in the event a member bank fails or goes bankrupt.
Working alongside the Finance Ministry and Bank Negara Malaysia, PIDM forms a critical part of Malaysia’s broader financial safety net.
This protection exists so that, even in the unlikely event of a bank failure, depositors can continue to access their money and essential banking services with minimal disruption.
Planning for the unexpected
Banking crises in Malaysia are uncommon, but when they do occur, their impact can be severe.
PIDM’s approach is therefore built on crisis preparedness, not crisis reaction.
This means developing detailed plans specific to member institutions so that, if a bank fails, PIDM already knows what it needs to do to resolve it.
These detailed plans are called resolution plans or ‘living wills’, which provide for options that PIDM can take – whether to assume control, restructure or execute a transfer of sale – to handle the bank resolution effectively based on its specific circumstances.
In a nutshell, if a bank can no longer operate, PIDM steps in to ensure that critical functions can continue so customers can still access their money and make payments, receive funds, service loans and carry on with their daily lives.
On a larger scale, these measures help ensure the smooth operation of the broader financial system, including payment processing between banks and lending between institutions.
By preparing for specific scenarios before trouble arises, PIDM can act quickly and decisively, reducing disruption for both financial consumers and the wider economy.
Two decades of protection and progress
Over the past two decades, PIDM has steadily expanded its role. In 2010, the statutory body raised the deposit protection limit from RM60,000 to RM250,000.
That same year, it also introduced the Takaful and Insurance Benefits Protection System (TIPS) to safeguard insurance policyholders and takaful certificate owners.
From 2020 onwards, PIDM has also advocated financial literacy as a founding member of the Financial Education Network (FEN). It has also launched initiatives such as the Sedia Payung Kewangan, which brings financial literacy outreach programmes and activations to different segments of society.
Most recently, in 2023, deposit protection coverage was extended to digital banks, ensuring protection keeps pace with where Malaysians keep their money today.
Celebrating a milestone
This year marks 20 years of PIDM’s work to safeguard Malaysia’s deposits.
Alongside a refreshed website and new video on how PIDM protects your money, the milestone serves as a reminder of why understanding deposit protection is essential.
It empowers people to make informed financial choices and gives reassurance that, even in uncertain times, their savings are safe today and in the years to come.
Explore the revamped website at www.pidm.gov.my.
