October 22, 2021

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Solons back passage of bill raising bank deposit insurance to P1 M

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A bill increasing from P500,000 to P1 million the maximum bank deposit to be covered by insurance appeared headed for passage as members of the House Committee on Banks and Financial Intermediaries aired support for the measure.

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(MANILA BULLETIN FILE PHOTO)

The House panel chaired by Quirino Rep. Junie Cua started its initial deliberation of House Bill 5812 which will raise the maximum deposit insurance coverage to P1 million.

In its committee deliberation on Friday, the House panel also discussed the passage of House Bill 8445 that provides for amendments in the legal and operational framework of the Philippine Deposit Insurance Corporation.

“The proposed amendments would prevent an overlap in the functions of the PDIC with the primary regulator of banks, the Bangko Sentral ng Pilipinas (BSP),” Cua said.

Authored by Makati City Rep. Luis Campos Jr., HB 5812 will increase the maximum bank deposit insurance to P1 million per depositor.

Campos noted that the current maximum deposit insurance of P500,000 had been fixed in 2009 under Republic Act No. 9567.

He explained that there is a need to adjust the amount of coverage for inflation in order to protect “a greater number of depositors”.

“This bill is also necessitated by the closure of 41 banks from 2017 to 2019 alone, which affected tens of thousands of depositors,” Campos explained.

On the other hand, Cua batted for amendments to Sections 1, 3, 4, 5, 6, 8, 9. 10, 11, 18, 22, 24, 26 and 28 of RA 3591 or the PDIC Charter.

HB 8445 provides that PDIC will be attached to the Bangko Sentral ng Pilipinas for policy and program coordination.

Among other amendments, the bill grants PDIC the power to conduct examination of banks “whenever the BSP deems it appropriate and necessary such as when there is a finding of fraud or unsafe or unsound banking related to deposit.”

Unsafe and unsound banking is defined under the bill as the conduct of business in an unlawful, unsafe, and unsound manner as may be defined by the BSP.

It also grants the BSP access to bank examination reports made by PDIC and will empower the former to join the conduct of examination.

Cua said the bill also allows the PDIC to “adapt to the changing times” by granting the board of directors authority “to increase the maximum deposit insurance coverage when financial stability is threatened, which shall be in consideration of empirical and actuarial studies, inflation or other economic indicators.”

He also proposed that PDIC’s exemption from salary standardization be lifted in order to ensure  its alignment “with other GOCC’s and government financial institutions in terms of compensation”.

“The authority for PDIC to set up deposit insurance schemes for the protection of users of new financial products and depositors in Islamic Banks are provided in the proposed amendments,” the veteran administration solon stated.

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