Republic Act No. 10846 amending the Charter of the Philippine Deposit Insurance Corporation (PDIC) takes effect on June 11, 2016. The law further strengthens the state deposit insurer's ability to protect the depositing public and promote financial stability. PDIC's enhanced authorities allow depositors quicker access to their insured deposits in the event of bank closure, empower PDIC to resolve problem banks while still open, hasten the liquidation process for closed banks and provide stiffer sanctions and penalties to those who commit anomalies, frauds and irregularities to the detriment of the depositing public and the banking system.

PDIC President Cristina Que Orbeta affirmed PDIC's commitment to continue building on its capabilities to more effectively perform its mandates. "The amendments to the deposit insurance law equip the PDIC with stronger authorities to be more responsive and effective in serving the needs of its stakeholders especially the depositing public."

R.A. 10846 introduces depositor protection measures such as the authority to pay insured deposits based also on evidence of deposits and not solely on the closed bank's records. Gross settlement will also be implemented in the payment of insured deposits such that depositors who are also borrowers of the same closed bank will be paid the full amount of their insured deposits. This gives depositor-borrowers the choice to settle their obligations to the bank immediately or when it falls due. This will not apply, however, in cases where legal compensation has set in or when the deposit is covered by a hold-out agreement between the depositor and the bank.

The amendments include a new resolution framework that allows PDIC to resolve problematic banks while these are still open, thereby addressing the risks posed by bank closures and in the process, promoting financial inclusion.

The new law also paved the way for the seamless transition from bank closure to liquidation. Upon bank closure, PDIC can now proceed directly to liquidate the bank and distribute its assets to creditors in accordance with the Rules on Concurrence and Preference of Credits. To facilitate liquidation and enhance the chances of recovery by creditors of their claims against the closed bank, the purchase of assets of the closed bank and assumption of its liabilities by another insured bank, without the need for approval of the liquidation court can now be undertaken as a mode of liquidation.

Erring bank owners, officers, and employees, as well as individuals and entities committing anomalies, frauds and irregularities and participating in schemes to defraud a bank now face stiffer penalties which include imprisonment of up to 12 years.

The provisions of R.A. 10846 will apply to banks ordered closed by the Monetary Board on June 11, 2016 and onwards.

President Orbeta said that PDIC will issue rules and regulations to implement relevant provisions of R.A. 10846.

R.A. No. 10846, authored by Senator Sergio R. Osmeña III, Chairman of the Senate Committee on Banks, Financial Institutions and Currencies, and by Representative Nelson P. Collantes, Chairman of the Committee on Banks and Other Financial Intermediaries of the House of Representatives, was signed into law by President Benigno Aquino III on May 23, 2016.

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