Philippine Deposit Insurance Corporation (PDIC) President Jose C. Nograles cautioned the depositing public anew to conduct their transactions only inside bank premises and with authorized bank personnel, or risk non-payment of deposit insurance. This came on the heels of recent complaints received against unauthorized activities of certain individuals purportedly bank employees, directly soliciting bank deposits from the public outside bank premises.

Nograles said that PDIC pays deposit insurance only on valid deposit accounts. He added that while there is adequate prudential regulation that provides the necessary safety net for depositors, the depositing public still needs to be more aware and cautious in their bank transactions in order to protect themselves. This, he said, was responsible and safe banking. Nograles said that if a transaction is made outside bank premises, the depositor has no way of ascertaining if the funds actually flowed into the bank and if the transaction is recorded in its records. BSP Circular Letter No. 2008-071 prohibits transacting outside bank premises without prior approval from the BSP, pursuant to Section X213 of the Manual of Regulations for Banks.

The call to safe and responsible banking is part of PDIC’s Be A Wise Saver campaign which promotes the Seven Habits of a Wise Saver. Among the Seven Habits is Habit No. 5, “Transact only inside the bank with authorized personnel.” The Be A Wise Saver campaign spearheaded by the PDIC with the participation of the Bangko Sentral ng Pilipinas (BSP), the Bankers Association of the Philippines, the Chamber of Thrift Banks, and the Bankers Marketing Association of the Philippines, was designed to educate the public on basic banking awareness and inculcate market discipline in bank depositors.

The PDIC President stressed that the habit of transacting only with legitimate bank personnel inside bank premises would help prevent a repeat of the predicament being faced by some depositors of the 12 Legacy-affiliated banks that closed in December 2008. As of end-January 2010, PDIC reported that it had denied 4,175 claims amounting to P204 million from depositors of the Legacy banks. Of the total denied claims, about 3,500 claims or 83% amounting to P125 million were accounts not found in bank records.

Senate and House investigations conducted last year unveiled a scheme where depositors of the Legacy banks transact with so-called “agents” of the bank. However, examination of the books of the banks revealed that some funds coursed through agents were diverted and a number of transactions not recorded in the books of the banks. PDIC had no recourse but to deny such claims in accordance with provisions of law.