Kuala lumpur: The government risked assuming liabilities of about RM74.5 billion if a massive panic withdrawal, or 'bank run', had occurred in 2018, said Minister in the Prime Minister's Department (Religious Affairs) Dr Zulkifli Hasan. He added that at the time, efforts to secure standby financing as a contingency measure in the event of a bank run had also failed.
According to BERNAMA News Agency, Dr Zulkifli highlighted the potential liabilities faced by the government during a ministerial briefing on the Royal Commission of Inquiry (RCI) report on Tabung Haji (TH). The briefing, held at a special sitting of the Dewan Rakyat, detailed the efforts and measures taken to restore TH's financial position. Dr Zulkifli explained that TH faced a critical situation in the fourth quarter of 2018, where the gap between its assets and liabilities had widened to more than RM10 billion, leaving only three months to find a solution.
Dr Zulkifli noted the importance of assets exceeding liabilities by the end of the year to declare a profit distribution for 2018. Without this, TH risked a bank run. He mentioned that panic withdrawals did occur in 2019, amounting to RM6 billion in net withdrawals, following the announcement of a 1.25 per cent hibah for 2018 in early 2019. This situation underscored the potential severity of a bank run had no hibah been declared.
He further explained that TH was technically insolvent at the time, necessitating intervention by the Pakatan Harapan government. The government implemented a restructuring plan to rescue TH, aiming to restore its financial position and ensure its long-term sustainability.
The 211-page RCI report, made public on July 29, revealed various findings on weaknesses in TH's management and operations from 2014 to 2020. It included 25 recommendations for improvement, with 75 per cent of these recommendations implemented by TH as of July 30.
The government had announced the establishment of the RCI in 2021, appointing its members on Jan 20, 2022. The report was subsequently presented to the Yang di-Pertuan Agong on Aug 30, 2022.