A bill to further protect the 50-million strong depositing public is expected to be passed into law soon.

Senate Bill No. 2976, amending Republic Act 3591, as amended, or the charter of the Philippine Deposit Insurance Corporation (PDIC), is now awaiting President Aquino's approval. It was passed by the Senate in December 2015 and adopted by the House of Representatives as an amendment to House Bill No. 6020 in January 2016.

SB 2976 aims to equip PDIC with enhanced authorities to implement measures to further improve depositor protection and promote financial stability. The bill is authored by Senator Sergio R. Osmeña III, Chairman of the Senate Committee on Banks, Financial Institutions and Currencies. Its counterpart bill in the House of Representatives was authored by Rep. Nelson P. Collantes, Chairman of the Committee on Banks and Financial Intermediaries.

The proposed legislation provides for the settlement of deposit insurance claims based not only on the closed bank's records but also on the depositor's evidence of deposit. Depositors with uninsured deposits will also benefit from the bill as it elevates the status of uninsured deposits from an ordinary credit to ordinary preferred credit which will improve their chances of recovering their hard-earned uninsured deposits in closed banks.

The proposed amendments to the PDIC Charter are also intended to minimize disruption to the financial system and promote financial inclusion by providing depositors with continued access to banking services. Among the highlights of the bill are reform measures in bank resolution and liquidation, immediate access to deposit insurance claims, elevation of status of uninsured deposits to ordinary preferred credit and enhanced governance and institutional framework for the state deposit insurer.

With a strengthened resolution authority, PDIC would be able to play a more proactive role in resolving problem banks while these are still open, preserving the bank's franchise value and minimizing disruption in the banking system. On the other hand, the new bank liquidation framework will remove the 90-day receivership period ensuring a seamless transition from bank closure to liquidation and hasten the disposal of closed banks' assets for immediate payment to creditors. The framework also adopts other liquidation tools such as the purchase of assets and liabilities to help prevent the dissipation of the value of closed banks' assets and enhance the chances of recovery of the creditors and depositors of their claims against the assets of closed banks.

Pursuant to the bill, PDIC will have greater independence and stronger organizational structure. It will also have expanded investment and fund management options to protect and build up the Deposit Insurance Fund, the funding source for payment of deposit insurance and assistance to distressed banks. With enhanced governance and institutional framework, PDIC will be able to respond more quickly to the changing financial landscape and align its services with international best practices in deposit insurance.

The bill has undergone consultations with stakeholders and is supported by the Department of Finance, government regulators such as the Bangko Sentral ng Pilipinas and the Securities and Exchange Commission, and the Governance Commission for GOCCs. The bill is also supported by the Bankers Association of the Philippines, the Chamber of Thrift Banks and the Rural Bankers Association of the Philippines.

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The Philippine Deposit Insurance Corporation (PDIC) was established on June 22, 1963 by Republic Act 3591 to provide depositor protection and help maintain stability in the financial system by providing permanent and continuing deposit insurance. 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. A joint account shall be insured separately from any individually-owned deposit account.

PDIC news/press releases and other information are available at the website, www.pdic.gov.ph.