PDIC Law

What is the Philippine Deposit Insurance Corporation (PDIC)?

PDIC is a government instrumentality created in 1963 by the virtue of Republic Act 3591 to insure the
deposits of all banks which are entitled to the benefits of insurance.

What are the functions of PDIC?

• Deposit Insurer
• Co-regulator of Banks
• Receiver and Liquidator of Closed Banks

What is PDIC’s maximum deposit insurance coverage?

Effective June 1, 2009, the maximum deposit insurance coverage is P500,000 per depositor. All deposit
accounts by a depositor in a closed bank maintained in the same right and capacity shall be added together.
Under R.A. No. 9576, the PDIC may propose to adjust the MDIC, subject to the approval of the President
of the Philippines, in case of a condition that threatens the monetary and financial stability of the banking
system that may have systemic consequences.

What is an insured deposit?

The term ‘insured deposit’ means the amount due to any bona fide depositor for legitimate deposits in
an insured bank net of any obligation of the depositor to the insured bank as of date of closure, but not to
exceed P500,000.00.
A joint account shall be insured separately from any individually-owned deposit account.

What are the exclusions from Insured Deposit coverage as stipulated in R.A. No. 9576?
• Investment products such as bonds, securities and trust accounts;
• Deposit accounts which are unfunded, fictitious or fraudulent;
• Deposit products constituting or emanating from unsafe and unsound banking practices;
• Deposits that are determined to be proceeds of an unlawful activity as defined under the Anti-Money
Laundering Law.

Shall the depositor pay any insurance premium to PDIC?

No. Insurance premium is paid by the banks, not by the depositors. The bank is assessed 1/5 of 1% per
annum of the assessment base of the bank.

What specific risks to a bank does PDIC cover?

PDIC covers only the risk of a bank closure ordered by the Monetary Board. Thus, bank losses due to
theft, fire, closure by reason of strike or existence of public disorder, revolution or civil war, are not covered by
PDIC.
Are deposits maintained in Philippine banks with branches outside the Philippines insured by the PDIC?
The PDIC Charter provides that a Philippine bank may elect to insure with the PDIC its deposits in
branches outside the Philippines.

Are deposits maintained in branches and subsidiaries of foreign banks operating in the Philippines insured by
the PDIC?
Yes, the PDIC Charter provides that the deposits in branches and subsidiaries of foreign banks licensed
by the Bangko Sentral ng Pilipinas (BSP) to perform banking functions in the Philippines are insured by the PDIC.

How is insurance coverage determined?

In determining the insured amount, the outstanding balance of each account is adjusted, such that
interests are updated, withholding taxes are deducted, accounts maintained by a depositor in the same right
and capacity are added together; and whenever applicable, unpaid loans and other obligations of the depositor
are deducted; and in no case shall insured deposit exceed P500,000.

Can PDIC insurance coverage be increased by having several accounts in the same name in an insured bank?
No. Deposit insurance coverage is not determined on a per-account basis. The type of account (whether
checking, savings, time or other form of deposit) has no bearing on the amount of insurance coverage.

If I have deposits in several different insured banks, will my deposits be added together for insurance
purposes?
No. Deposits in different banking institutions are insured separately. However, if a bank has one or more
branches, the main office and all branch offices are considered as one bank. Thus, if you have deposits at the
main office and at one or more branch offices of the same bank, the deposits are added together when
determining deposit insurance coverage, the total of which shall not exceed P500,000.

When should the depositor of a closed insured bank file his claim with PDIC?
The depositor of the closed insured bank has 24 months from date of bank takeover to file his deposit
insurance claim.

What happens when the depositor of a closed bank fails to file his claim within the 24-month period?
All rights of the depositor with respect to the insured deposit shall no longer be honored. But he may
still make a claim against the assets of the closed bank.

How long does it take PDIC to settle a claim for insured deposit?
PDIC aims to pay valid claims as soon as possible. Prior to payout, claims are examined thoroughly. This
is to protect the Deposit Insurance Fund (DIF) which is the source of insurance payments. Sometimes, depositors
mistakenly assume that the payouts are sourced from their deposits. This is not the case. The payouts are from
PDIC’s own funds.
The claim for insured deposit should be settled within six (6) months from the date of filing
provided all requirements are met but the claim must be filed within twenty-four (24) months after bank
takeover. The six-month period shall not apply if the documents of the claimant are incomplete or if the validity
of the claim requires the resolution of issues of facts and law by another office, body or agency, independently
or in coordination with PDIC.
If the deposit account in a closed bank is more than P500,000.00, what happens to the excess of the maximum
amount of insured deposit?
If the closed bank is not rehabilitated or taken over by another bank, amount in excess of the P500,000
coverage can still be claimed upon the final liquidation of the remaining assets of the closed bank.
The claim may be filed with the Liquidator of the closed bank but payment of the said claim will depend
on the bank's available assets to settle its preferred claims (Government taxes, labor claims, secured credits and
trust funds) and approval of the Liquidation Court. The schedule of payment beyond the P500,000.00 maximum
insurance shall be based on priorities set by law.

-MS