Pidm Amendment Bill Passed

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Deputy finance minister Yamani Hafez Musa said with new technologies and innovations, the financial industry had become more complex, creating new opportunities and challenges.KUALA LUMPUR: The Dewan Rakyat has unanimously passed the Malaysia Deposit Insurance Corporation (PIDM) (Amendment) Bill 2021, which aims to improve the governance of the body.
The bill, which was approved after the third reading, was to amend the Malaysia Deposit Insurance Corporation Act 2011 (Act 720) by inserting new provisions.
Earlier, deputy finance minister Yamani Hafez Musa tabled the bill for the second reading after the first reading on Sept 23.
He said the objective of the PIDM was to govern the deposit insurance system, as well as the takaful and insurance benefits protection system under Act 720.
“It is also to provide insurance against the loss, part or all, of the deposit for which the depositor member is liable and to provide protection against the loss, part or all, of the takaful or insurance benefits for which the insured member is liable.
“The objective is also to provide incentives for proper risk management in the financial system and to promote or contribute to its stability,” he said.
Yamani said the financial industry has become more complex and dynamic with the emergence of new technologies and innovations, globalisation, demographic changes and constantly changing market environment.
“This has created new opportunities and challenges to the financial sector in Malaysia,” he said.
Ten MPs debated on the bill.
In the winding-up session, he said the bill would, among others, improve the efficiency of PIDM’s corporate governance and operational readiness to perform its functions and obligations to promote the stability of the Malaysian financial system.
He said Clauses 4 to 8 were amendments to enhance the effectiveness and accountability of PIDM’s board governance.
Meanwhile, he said to strengthen PIDM’s readiness and efficiency in discharging its statutory responsibilities, the new Section 97A provided that PIDM would draft, review and amend resolution plans for its member institutions.
He said for the assessment of premiums and levies, Clause 12 to 17, in respect of deposit-taking members, and Clause 22 to 27, in respect of members of insurers, of the bill aimed to refine the assessment of premiums and levies for PIDM member institutions.
“This amendment provides for the assessment of premiums and levies for member institutions involved in amalgamation,” he said.
Yamani said if a member institution were to merge with another, the merged entity would be assessed based on the risk profile of the merged member institution.
“This will ensure that the assessment of premiums and levies is fairer, more transparent and on par with the assessment of other member institutions,” he said.
He said to correct typographical errors, the proposed amendments included harmonising the interpretation of “conventional deposits”, “Islamic deposits” and “investment accounts” in the PIDM Act with the interpretations in Bank Negara Malaysia legislations, namely the Financial Services Act 2013 and the Islamic Financial Services Act 2013.
He said the bill also clarified that investments linked to derivative products were not included in the definition of “deposit” and therefore not under the scope of PIDM’s protection.
The bill also updated and amended all references to the old Companies Act 1965 to the new Company Act 2016. - FMT

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