The Philippine Deposit Insurance Corporation (PDIC) is a government instrumentality created on June 22, 1963 by Republic Act 3591 entitled, An Act Establishing the Philippine Deposit Insurance Corporation (PDIC), Defining Its Powers and Duties and for Other Purposes.
Public Policy Objectives
PDIC was established to promote and safeguard the interests of the depositing public by way of providing insurance coverage on all insured deposits. PDIC also aims to strengthen the mandatory deposit insurance coverage system to generate, preserve, and maintain faith and confidence in the country’s banking system, and protect it from illegal schemes and machinations.Mandates
Consistent with its public policy objectives, the PDIC has the following mandates:
- Deposit Insurance. PDIC provides a maximum deposit insurance coverage of PHP500,000 per depositor per bank. To pay claims on insured deposits, PDIC builds up the Deposit Insurance Fund (DIF) primarily through assessments of member-banks at an annual flat rate of 1/5 of 1% of their total deposit liabilities.
Liquidation of Closed Banks.
PDIC proceeds with the liquidation process upon order of the Monetary Board of the Bangko Sentral ng Pilipinas (BSP). The assets of the closed bank are managed and eventually disposed to settle claims of creditors in accordance with the preference and concurrence of credits as provided by the Civil Code of the Philippines.
- Insurance Risk Mitigation. . To ensure financial safety and soundness of banks, PDIC resolves problem banks through strengthening programs and other resolution measures. It also mitigates insurance risk through refocused bank examination to identify member-banks that pose risks to the DIF. Examination findings are used as basis for implementing enforcement actions.
Membership with PDIC is mandatory for all banks licensed by the BSP to operate in the Philippines:
- Banks incorporated under Philippine laws, such as commercial banks, savings banks, mortgage banks, stock savings and loan associations, development banks, cooperative banks, and rural banks
Domestic branches of foreign banks
As of 31 December 2016, there are 602 member-banks of PDIC. These consist of 42 commercial banks which include branches of foreign banks, 60 thrift banks (savings banks, mortgage banks, stock savings and loan associations, and development banks), and 500 rural banks (including cooperative banks).
Scope of Deposit Insurance Protection
PDIC provides a maximum deposit insurance coverage of PHP500,000 per depositor per bank. It covers all types of bank deposits in member-banks whether denominated in local or foreign currencies. All deposit accounts of a depositor in a closed bank maintained in the same right and capacity shall be added together. A joint account shall be insured separately from any individually-owned deposit account.
As of 31 December 2016, around 54 million accounts in 602 member-banks are covered by deposit insurance. Of the total number of accounts, 96.4% are with balances not exceeding the maximum deposit insurance coverage of PHP500,000 per depositor per bank. For the same period, total deposits in the Philippine banking system amounted to PHP10.5 trillion, of which 21.5% was covered by deposit insurance.