I just got back from attending a 3 days course on the Central Banking & Deposit Insurance System. While the fire is still burning strong within me, this course has actually inspired me to create a new topic in my blog where I could share some information on the Banking & Deposit Insurance (DI) business.
Now..very often when ppl ask where do I work and when I answer I work as an accountant (not qualified yet) in a Deposit Insurer, I often have to explain what is DI in a very layman term. It goes “You know, when a bank goes bankrupt, depositors will get back their monies in the bank, yeah, basically we do that type of business”
DI involves more than paying depositors in the event of a bank failure. DI is part of the Financial Safety Net to instil public confidence in the financial/ banking industry. DI promotes public confidence by guarantying prompt reimbursement to depositors in the case of a bank failure so that the public does not panic and start queuing in front of a bank!. In many countries where their DI adopt a risk minimiser model, the DI is also given powers to reinforces and complements the existing regulatory and supervisory framework by providing incentives for sound risk management in the financial system.
In Malaysia’s context, we have the Risk Assessment System and Differential Premium System where we assess and monitor the banks’ risk and banks with higher risk will pay higher premiums!
Of course, different DIs in different countries adopt different model – there are the DI operates as paybox, some DI with supervisory power, some without, some DI as an independent body, some not, and the list goes on. There are also issues on DI coverage, risk assessment, collaboration between Central Banks and DI, Intervention and Resolution, Funding and Provisioning etc etc.
Perhaps a lil clarification on why I am writing this (I am not a professional in this area anyway), the DI speciality is that you will only have ONE DI in one country and that’s what I am passionate about – you wouldn’t get this else where in the country!
Probably I’ll keep the above as a brief introductory as a kick off to my ambitious plan to write about Banking System and DI – bits by bits. Seriously there are so many things to share! Maybe just a short 1-2 paragraph of interesting facts (something like Do You Know?) every week, and this is most likely will be gradually reduce to fortnightly to monthly to quarterly. We shall see how it (read: my mood & passion/motivation level) goes, haha!
So for this week Do You Know? – I am quoting something very interesting that was shared to us by an Afghanistan participant during his country presentation.
We (the Central Bank) have drafted a Deposit Insurance proposal to the cabinet for approval. Having said so, in view of the political instability (and war), in Afghanistan, there is no Life Insurance, and yet we drafted a Deposit Insurance! I think we should have a Life Insurance rather than a Deposit Insurance! Any insurance companies would like to insure us? Pls come!
- by a very leng chai Afghan whom I dont know his name, I’ll publish it once I get hold of it.
Hahaha.. so cute.. so funny!
Disclaimer: I am not the expert in Banking and DI and the above are solely personal opinion and facts at my best knowledge. The central bank/ deposit insurer are not responsible for any misrepresentation. Don’t sue them. Don’t sue me either because you are required to conduct your own due diligence on the information although mine are 90% reliable. 
In my best effort, I’ll provide up-to-date and more accurate information in this blog from time to time. Pls feel free to visit the various central banks and DIs website for more information.
