PIDM - Are my Savings safe in a Bank?

During the 2008 financial crisis, global banks around the world starting collapsing and since then, people started to question the security of their savings. The possibility of local and foreign banks in Malaysia remaining in business forever is not guaranteed and thus your savings could be at risk should a bank fail. So is your money safe? 

The golden rule to saving is to ensure you put your cash into a Malaysia regulated bank that is protected under the Perbadanan Insurans Deposit Malaysia (PIDM) membership scheme. PIDM protects your bank deposits and will promptly reimburse you on your insured deposits should a member bank fail and there is no charge for this insurance protection.  Keep an eye out for the logo at your banking institution (image below).

Savings of up to RM 250,000 is guaranteed by the PIDM per institution so if you have less than than, you don’t have too much to worry about. If you have more to save, you can get protection on your entire savings by dividing your savings into several accounts/bank institutions.

Example: you had RM1,000,000 and didn’t want to take any risk, you could open 4 separate accounts in 4 separate banks.

What you are effectively doing is spreading the risk over many banks and thus not putting all your eggs into one basket. Click here for a list of all PIDM member institutions.

Another way to protect your savings is to open joint accounts because they also enjoy separate deposit insurance under the PIDM scheme. You could place RM250,000 into your own account but also open a joint accounts with your father, mother spouse etc. Each account that you open with someone else is protected up to RM250,000.

What about Cooperative Banks like Bank Rakyat and Bank Persatuan?

Bank Rakyat and Bank Persatuan are not members of PIDM so deposits at this institution are not protected under this scheme. However, under the Development of Financial Institutions Act 2002, cooperative banks are under the purview of the Ministry of Finance and the Central Bank which gives an implicit guarantee on the deposits at this institution

As the mechanism for depositor protection is different than what is offered by PIDM, we have no idea what the process is or whether the Ministry will guarantee more than RM250,000 per depositor or indeed if its an automatic matching and reimbursement of depositors as per the PIDM scheme.  It's a strange scenario - no one really wants this procedure to be tested (ie. the bank fails), but until it is, we won't know how well the new system works.