Islamic Finance News Portal – Bringing you the latest updates in global Shariah finance

Watch out for news alert!

PIDM Expects Islamic Deposits To Increase To 10 Percent This Year

leave a comment »

Points of Essence:

  • PIDM forecasts Islamic deposit to increase 10% this year due to more establishment of Islamic banks in the country.
  • The Islamic deposits which totaled RM21.7 billion this year will provide protection to depositors against the loss of insured deposits placed with an Islamic member institution or in the unlikely event that it is unable to meet financial obligations. This will instill public confidence and promote financial stability.

KUALA LUMPUR, Aug 18 (Bernama) — The Perbadanan Insurans Deposit Malaysia (PIDM), expects Islamic deposits to increase slightly to 10 percent this year from 8.0 percent in 2007.

This follows the establishment of more full-fledged Islamic banks in the country.

PIDM general manager, insurance, risk assessment and monitoring, Md Khairuddin Arshad said the trend showed that more people were investing in Islamic Banks.

“Previously, some commercial banks operated through Islamic windows.But now they seem to have full-fledged Islamic banking services,” he told reporters after presenting a paper entitled, Islamic Deposit Insurance: The Malaysian Experience, at a seminar on Islamic deposit insurance here today.

He said the level of insured deposits -insured by PIDM under the deposit insurance system – as at Dec 31, 2007 amounted to RM191.5 billion of which conventional deposits amounted to RM169.8 billion and Islamic deposits RM21.7billion.

Commenting on the Islamic deposit insurance, he said it was a system that provides protection to depositors against the loss of insured deposits placed with an Islamic member instutition or in the unlikely event that it is unable to meet financial obligations.

The islamic deposit insurance operates in accordance with shariah principles.

Md Khairuddin said the Islamic deposit insurance was also needed to ensure the competitiveness of the Islamic banking system vis-a-vis conventional banking.

“It is also to instil public confidence and promote financial stability,” he explained.

Established almost three years ago, PIDM’s role is protect Islamic and conventional deposits, provide incentives for promoting sound risk management and contribute to the overall stability of the financial system in Malaysia.

Md Khairuddin highlighted that to date the PIDM had completed separate risk assesments for both the Islamic and conventional systems.However, there was still much infrastructure that needed to be developed and enhanced in the Islamic system.

“The Islamic banking industry is growing and more indicators are required to assess the risk.This is an area we are now focusing on,” he said.

He added that Islamic products are in demand now and new ones might be introduced by banks in future, such as the Wakalah, now available in Iran.

“The Wakalah is such that a customer deposits money in the bank which becomes the agent.The bank just manages the deposit and takes a certain percentage of profit with the customer getting the rest,” he said.

The PIDM has currently 35 members comprising 22 conventional banks and 13 Islamic banks.

Source: BERNAMA

Advertisements

Written by Suapi Shaffaii

August 20, 2008 at 3:22 pm

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: