Banking Reviewer

What is the Philippine Deposit Insurance Corporation (PDIC)?

PDIC is a government instrumentality created in 1963 by virtue of Republic Act 3591 to insure te deposits of all ban!s "ic are entitled to te bene#ts of insurance$ %e latest amendments to RA 3591 are contained in RA 95&6 signed into la" on April '9( '))9$ RA 95&6 increased te ma*imum deposit insurance coverage to P5))()))$))$ %e ne" la" also includes important provisions to ensure tat te PDIC remains #nancially #nancially and institutionally institutionally strong to ful#ll its mandate under its Carter$  %e PDIC no" as as te autority autority to determine determine "ic "ic deposit products products are are covered covered by insurance$ %e PDIC is also autori+ed to conduct independent special e*amination e*amination of ban!s and may in,uire into or e*amine deposit accounts of ailing ban!s in te event tere is a #nding of unsafe and unsound ban!ing practices$ Part of te #nancial strengtening measures for te PDIC( on te oter and( include e*emption from ta*es and te autority to issue sovereign bonds( debentures and oter debt issuances$  %e PDIC is an attaced agency of te te Department of -inance$

.at is PDIC/s overall mandate0 PDIC e*ists to provide permanent and continuing deposit insurance coverage for te depositing public to elp promote public con#dence and stability in te economy$ It ensures prompt payment of insured deposits( e*ercises complementary supervision of ban!s( adopts responsive responsive resolution metods( and applies ecient management of receiversip and li,uidation functions$ What are the functions of PDIC?   

Deposit Insurer Co2regulator Co2regulator of an!s Receiver and 4i,uidator 4i,uidator of Closed an!s an!s

What is PDIC’s maximum deposit insurance coverage?

ective 7une 1( '))9( te ma*imum deposit insurance coverage is P5))())) per depositor$ All deposit accounts by a depositor in a closed ban! maintained in te same rigt and capacity sall be added togeter$ 8nder R$A$ o$ 95&6( te PDIC may propose to ad:ust te ;DIC( sub:ect to te approval of te President of te Pilippines( in case of a condition tat treatens te monetary and #nancial stability of te ban!ing system tat may ave systemic conse,uences$ .at is an insured deposit0  %e term
deposits in an insured ban! net of any obligation of te depositor to te insured ban! as of date of closure( but not to e*ceed P5))()))$))$ A :oint account sall be insured separately from any individually2o"ned deposit account$ R$A$ o$ 95&6 stipulates tat PDIC "ill not pay deposit insurance for te follo"ing accounts or transactions= 1$ Investment products suc as bonds( securities and trust accounts> '$ Deposit accounts "ic are unfunded( #ctitious or fraudulent> 3$ Deposit products constituting or emanating from unsafe and unsound ban!ing practices> ?$ Deposits tat are determined to be proceeds of an unla"ful activity as de#ned under te Anti2;oney 4aundering 4a"$ .at types of deposits are insured by PDIC0 *cept for te e*clusions stipulated in RA 95&6( deposits of all commercial ban!s( savings and mortgage ban!s( rural ban!s( private development ban!s( cooperative ban!s( savings and loan associations( as "ell as brances and agencies in te Pilippines of foreign ban!s and all oter corporations autori+ed to perform ban!ing functions in te Pilippines( are insured "it PDIC$ As for Pilippine ban!s "it brances outside te country( RA 95&6 stipulates tat sub:ect to te approval of te oard of Directors( any insured ban! "it branc outside te Pilippines may elect to include for insurance its deposit obligations payable at suc branc$ -oreign currency deposits are also insured by PDIC pursuant to RA 6?'6 @An act instituting a foreign currency deposit system in te Pilippines( and for oter purposesB and Central an! @C Circular o$ 139$ Depositors may receive payment in te same currency in "ic te insured deposit is denominated$ *clusions from deposit insurance coverage as stipulated in R$A$ o$ 95&6= 1$ Investment products suc as bonds( securities and trust accounts> '$ Deposit accounts "ic are unfunded( #ctitious or fraudulent> 3$ Deposit products constituting or emanating from unsafe and unsound ban!ing practices> ?$ Deposits tat are determined to be proceeds of an unla"ful activity as de#ned under te Anti2;oney 4aundering 4a"$

Are deposits maintained in brances and subsidiaries of foreign ban!s operating in te Pilippines insured by te PDIC0  Ees( te PDIC Carter provides tat te deposits in brances and subsidiaries of foreign ban!s licensed by te ang!o Fentral ng Pilipinas @FP to perform ban!ing functions in te Pilippines are insured by te PDIC$ Are deposits maintained in Pilippine ban!s "it brances outside te Pilippines insured by te PDIC0

 %e PDIC Carter provides tat a Pilippine ban! may elect to insure "it te PDIC its deposits in brances outside te Pilippines$ As of 31 December ')1'( no Pilippine ban! as elected to insure deposits in teir foreign brances "it PDIC$  %o verify if your deposits in a branc of a Pilippine ban! outside te Pilippines are covered by deposit insurance in te ost foreign country( please in,uire "it te account ocer of your branc$ What specic risks to a ank does PDIC cover?

PDIC covers only te ris! of a ban! closure ordered by te ;onetary oard$ %us( ban! losses due to teft( #re( closure by reason of stri!e or e*istence of public disorder( revolution or civil "ar( are not covered by PDIC$

!hall the depositor pa" an" insurance premium to PDIC?

o$ Insurance premium is paid by te ban!s( not by te depositors$ %e ban! is assessed 1G5 of 1H per annum of te assessment base of te ban!$

#o$ is insurance coverage determined? In determining te insured amount( te outstanding balance of eac account is ad:usted( suc tat interests are updated( "itolding ta*es are deducted( accounts maintained by a depositor in te same rigt and capacity are added togeter> and "enever applicable( unpaid loans and oter obligations of te depositor are deducted> and in no case sall insured deposit e*ceed P5))()))$ R$A$ o$ 95&6 stipulates tat PDIC "ill not pay deposit insurance for te follo"ing accounts or transactions= 1$ Investment products suc as bonds( securities and trust accounts> '$ Deposit accounts "ic are unfunded( #ctitious or fraudulent> 3$ Deposit products constituting or emanating from unsafe and unsound ban!ing practices> ?$ Deposits tat are determined to be proceeds of an unla"ful activity as de#ned under te Anti2;oney 4aundering 4a"$ Can PDIC insurance coverage e increased " having several accounts in the same name in an insured ank?

o$ Deposit insurance coverage is not determined on a per2account basis$ %e type of account @"eter cec!ing( savings( time or oter form of deposit as no bearing on te

amount of insurance coverage$

If I have deposits in several di%erent insured anks& $ill m" deposits e added together for insurance purposes?

o$ Deposits in dierent ban!ing institutions are insured separately$ o"ever( if a ban! as one or more brances( te main oce and all branc oces are considered as one ban!$  %us( if you ave deposits at te main oce and at one or more branc oces of te same ban!( te deposits are added togeter "en determining deposit insurance coverage( te total of "ic sall not e*ceed P5))()))$ Is there a need for a depositor to le his claim for insured deposit $ith PDIC?

 Ees$ Depositors "ill be advised troug te national andGor local media and posters at te premises of te closed insured ban! and oter public places "itin te locality on te scedule of distribution of claim forms by PDIC( receiving of claim forms by PDIC( and te prescriptive date of #ling claims by te depositors$

.en sould te depositor of a closed insured ban! #le is claim "it PDIC0  %e depositor of te closed insured ban! as '? monts from date of ban! ta!eover to #le is deposit insurance claim$ What processes are involved efore PDIC starts servicing claims?

Deposit records are sub:ected to an e*amination prior to te start of servicingGsettlement of claims$ Claims are evaluated and processed according to PDICJs standard procedures$ o" long does it ta!e PDIC to settle a claim for insured deposit0 PDIC aims to pay valid claims as soon as possible$ Prior to payout( claims are e*amined torougly$ %is is to protect te Deposit Insurance -und @DI- "ic is te source of insurance payments$ Fometimes( depositors mista!enly assume tat te payouts are sourced from teir deposits$ %is is not te case$ %e payouts are from PDIC/s o"n funds$  %e claim for insured deposit sould be settled "itin si* @6 monts from te date of #ling provided all re,uirements are met but te claim must be #led "itin t"enty2four @'? monts after ban! ta!eover$ %e si*2mont period sall not apply if te documents of te claimant are incomplete or if te validity of te claim re,uires te resolution of issues of facts and la" by anoter oce( body or agency( independently or in coordination "it PDIC$ o" long does te pre2settlement e*amination ta!e0  %e lengt of time needed for te pre2settlement e*amination of deposit liabilities of a

closed insured ban! largely depends on te completeness and accuracy of records turned over by te an! to PDIC and te number of deposit accounts to be e*amined$