PHILIPPINE DEPOSIT INSURANCE CORPORATION

Source: http://www.pdic.gov.ph/

What is the Philippine Deposit Insurance Corporation or PDIC?

PDIC is a government instrumentality created in 1963 by virtue of Republic Act 3591 to

insure the deposits of all banks which are entitled to the benefits of insurance. The latest
amendments to RA 3591 are contained in RA 10846 signed into law on May 23, 2016. RA
10846 empowered PDIC with stronger authorities to protect the depositing public and
promote financial stability. The new law also includes important provisions to ensure that
the PDIC remains financially and institutionally strong to fulfill its mandate under its
Charter.

The PDIC now has the authority to help depositors have quicker access to their insured
deposits should their bank close; resolve problem banks while still open; hasten the
liquidation process for closed banks; and mete out stiffer sanctions and penalties against
those who engage in unsafe and unsound banking practices.

The PDIC is an attached agency of the Department of Finance.

What is PDIC’s overall mandate?

PDIC exists to provide deposit insurance coverage for the depositing public to help
promote public confidence and stability in the economy. It ensures prompt payment of
insured deposits, exercises complementary supervision of banks, adopts responsive
resolution methods, and applies efficient management of receivership and liquidation
functions.

What are the functions of PDIC?

• Deposit insurer
• Receiver/Liquidator of distressed banks
• Co-Regulator of the BSP over banking institutions

What is PDIC’s maximum 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.

R.A. No. 9576 stipulates that PDIC will not pay deposit insurance for the following
accounts or transactions:

1. Investment products such as bonds, securities and trust accounts;

2. Deposit accounts which are unfunded, fictitious or fraudulent;
3. Deposit products constituting or emanating from unsafe and unsound banking
practices;
4. Deposits that are determined to be proceeds of an unlawful activity as defined
under the Anti-Money Laundering Law.

Note: “Splitting of deposit” occurs whenever a deposit account with an outstanding

balance of more than the statutory maximum amount of insured deposit maintained
under the name of natural or juridical entity is broken down and transferred into two or
more accounts in the different names within 120 days immediately preceding or during a
bank-declared holiday, or immediately preceding a closure order, for purposes of availing
of the maximum deposit insurance.

Are all banks members of PDIC?

Membership of banks to PDIC is mandatory; hence, all operating banks are members of
PDIC.

What types of deposits are insured by PDIC?

Except for the exclusions stipulated in RA 9576, deposits of all commercial banks, savings
and mortgage banks, rural banks, private development banks, cooperative banks, savings
and loan associations, as well as branches and agencies in the Philippines of foreign banks
and all other corporations authorized to perform banking functions in the Philippines, are
insured with PDIC. As for Philippine banks with branches outside the country, RA 9576
stipulates that subject to the approval of the Board of Directors, any insured bank with
 branch outside the Philippines may elect to include for insurance its deposit obligations
payable at such branch.

Foreign currency deposits are also insured by PDIC pursuant to RA 6426 (“An act
instituting a foreign currency deposit system in the Philippines, and for other purposes”)
and Central Bank (CB) Circular No. 1389. Depositors may receive payment in the same
currency in which the insured deposit is denominated.

Exclusions from deposit insurance coverage as stipulated in R.A. No. 9576:

1. Investment products such as bonds, securities and trust accounts;

2. Deposit accounts which are unfunded, fictitious or fraudulent;
3. Deposit products constituting or emanating from unsafe and unsound banking
practices;
4. Deposits that are determined to be proceeds of an unlawful activity as defined
under the Anti-Money Laundering Law.

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.

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. As of 31 December 2012, no Philippine bank
has elected to insure deposits in their foreign branches with PDIC.

To verify if your deposits in a branch of a Philippine bank outside the Philippines are
covered by deposit insurance in the host foreign country, please inquire with the account
officer of your branch.

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.
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.

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.

R.A. No. 9576 stipulates that PDIC will not pay deposit insurance for the following
accounts or transactions:

Investment products such as bonds, securities and trust accounts;

1. Deposit accounts which are unfunded, fictitious or fraudulent;

2. Deposit products constituting or emanating from unsafe and unsound banking
practices;
3. Deposits that are determined to be proceeds of an unlawful activity as defined
under the Anti-Money Laundering Law.

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.
Is there a need for a depositor to file his claim for insured deposit with PDIC?

Yes. Depositors will be advised through the national and/or local media and posters at
the premises of the closed insured bank and other public places within the locality on the
schedule of distribution of claim forms by PDIC, receiving of claim forms by PDIC, and the
prescriptive date of filing claims by the depositors.

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.

What processes are involved before PDIC starts servicing claims?

Deposit records are subjected to an examination prior to the start of servicing/settlement

of claims. Claims are evaluated and processed according to PDIC's standard procedures.

How long does the pre-settlement examination take?

The length of time needed for the pre-settlement examination of deposit liabilities of a
closed insured bank largely depends on the completeness and accuracy of records turned
over by the Bank to PDIC and the number of deposit accounts to be examined.
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?

The claim for the uninsured portion of the deposit is a claim against the assets of the
closed bank.

The claim may be filed with the Liquidator of the closed bank within sixty (60) days from
publication of notice of closure. However, payment of said claim will depend on the
bank’s available assets 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.

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?

The claim for the uninsured portion of the deposit is a claim against the assets of the
closed bank.

The claim may be filed with the Liquidator of the closed bank within sixty (60) days from
publication of notice of closure. However, payment of said claim will depend on the
bank’s available assets 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.