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Congress Ratifies PDIC Charter Amendments |
Around 26 million depositors now stand to enjoy greater protection with the recent Congressional ratification of the legislation amending the charter of the Philippine Deposit Insurance Corporation (PDIC), effectively increasing the maximum deposit insurance coverage (MDIC) to P250,000 from the present P100,000. In an unprecedented move, Congress ratified the PDIC bill, a certified priority legislation of the Arroyo administration, on June 11, prior to its sine die adjournment, expanding deposit insurance coverage and strengthening PDIC's risk management capabilities by restoring its authority to examine member banks. PDIC's independent examination powers were repealed when the General Banking Act was enacted into law in May 2000. The restoration of its examination authority will enable PDIC to manage the greater risks posed by the increased deposit insurance cover of P250,000 per depositor without a corresponding increase in assessment premium paid by banks, and the lifting of PDIC's authority to terminate insured status of delinquent banks. The non-termination of insured status is an amendment included in the ratified bill. The examination authority will allow PDIC to look into the records of the bank no more than once a year with the approval from the Monetary Board. This move will provide greater depositor protection as it reinforces BSP's primordial supervisory function over banks especially over those engaged in unsound and unsafe banking practices or are in distress, allowing both agencies to enforce prompt correction action. The increase in insurance cover for deposits was intended to restore the extent of deposit protection to the level when it was last increased to P100,000 in 1992 , after inflation and the peso depreciation have greatly diminished the protection level of the present MDIC. With the MDIC expansion, PDIC will enhance deposit protection to some 26 million depositors in the banking system. Total insured deposits in the system is now estimated at P717 billion, comprising 96 percent of total deposit accounts, from only P462 billion or 91 percent of total deposit accounts at the current P100,000 cover. Almost all depositors in the rural banks, or 99 percent will be fully insured at P250,000 compared to only 91 percent at P100,000 cover. Among the other refinements set forth in the approved measure are the following:
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