KUALA LUMPUR (Dec 13): Malaysian Insurance Deposit Corp (PIDM) has revised its differential premium systems (DPS) framework for the country's deposit insurance system to reflect banks' diversified funding sources.

PIDM is a statutory body which provides protection against the loss of deposit and insurance or takaful benefits with its member institutions in the event of a failure.

In a statement today, PIDM said the DPS framework determines the differential premium rates to be paid by member banks. PIDM said it had recently revised the framework to introduce new indicators in member banks' funding profiles.

"The 'loans to available funds' ratio and 'composition of core funds' indicator replaces the 'loans to deposits' ratio and the 'composition of individual depositors' indicator, respectively," PIDM said.

PIDM chief executive officer Rafiz Azuan Abdullah said in the statement: "Over time, banks have increasingly diversified their funding sources. Apart from traditional deposits, long-term debt instruments are gaining prominence as a source of stable funding, given the recognition under Basel III's liquidity standards and advancements in Malaysia's capital market. The revision to the DPS framework is timely to reflect such developments."

According to PIDM's statement, the revised DPS framework is effective beginning 2018. As such, the assessment of the indicators under the revised framework will be based on member banks' positions as at Dec 31, 2017.