Saturday, October 18, 2008

Government Guarantees 100% of Bank Accounts

With the global financial markets going havoc in USA and Europe, governments in countries such as Hong Kong, Indonesia, Australia and New Zealand have provided guarantees on all bank accounts.

To safeguard Malaysian bank accounts, there is this deposit insurance system that was established since Sept 2005 to protect Malaysian bank accounts up to RM60,000 per depositor per bank. This insurance scheme is protected via a scheme arranged by Perbadanan Insurans Deposit Malaysia ("PIDM"). To see how much your bank account is protected in case your bank fold up, you can refer to PIDM's insurance coverage on the respective bank accounts.

In providing further assurance to all bank account holders, the Malaysian government has now announced that a blanket guarantee will be provided for all ringgit and foreign currency deposits with commercial, Islamic and investment banks, and deposit taking development financial institutions that are regulated by Bank Negara Malaysia, the central bank. Now everyone can breathe easily up to 31 Dec 2010, the last day of the blanket guarantee by PIDM.

Why did the Malaysian government give such a blanket guarantee? Something wrong somewhere that we, the bank depositors, have not been made aware of?

The Association of Banks in Malaysia gave an assuring statement that Malaysian banks are safe and sound.

I would say that it is a good step taken by the government to prevent any unwanted panic situation. Imagine receiving this message via sms or emails - "this xxxx bank will be closing its operations in the next few days and you are advised to withdraw all your money before other depositors do it". It may cause mayhem in Malaysia.

There are exceptions and they are as follow:-
- Deposits not payable in Malaysia
- Foreign currency deposits
- Negotiable instruments of deposit (NIDs) and other bearer deposits
- Repurchase agreements
- Money market deposits
- Stocks and bonds
- Unit trusts

If, I'm saying a big IF, your bank was to fold up in Jan 2009 ............ like the Origami Bank in Japan, what are your chances in retrieving all those monies in the bank? Well, it's guaranteed till 31 Dec 2010 for now and you will get all your money back within three months ........ starting from which particular date, that I don't know.

Reading: Malaysia and Singapore to guarantee all bank deposits - Star
Tags: Malaysia, PIDM, Perbadanan Insurans Deposit Malaysia, Malaysian Banks, Bank Negara Malaysia, Association of Banks in Malaysia, BNM, Bank Account, Individual Depositor Account, Joint Account, Trust Account, Sole Proprietor Account, Partnership Account, Professional Practice Account, Savings Account, Fixed Deposit Account, Ringgit Currency Deposit, Foreign Currency Deposit



Blogger eiling lim said...

That's why if you can, dig a hole in the house, if under your bed possible and hide the money there. It's safer than the banks!

18 October, 2008 09:35  
Blogger Johnny Ong said...

eiling - lol .... i like yr creative mind

18 October, 2008 22:21  
Blogger eiling lim said...

Haha..thanks but it doesn't work for apartments/condos ya!

19 October, 2008 10:09  
Blogger Johnny Ong said...

eiling - will plan one for my new house then hehe

20 October, 2008 10:11  

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