WHAT IS THE PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC)?

PDIC is a government instrumentality created in 1963 by virtue of Republic Act 3591 to insure
the deposits of all banks which are entitled to the benefits of insurance. The latest
amendments to RA 3591 are contained in RA 10846 signed into law on May 23, 2016. RA
10846 empowered PDIC with stronger authorities to protect the depositing public and
promote financial stability. The new law also includes important provisions to ensure that the
PDIC remains financially and institutionally strong to fulfill its mandate under its Charter.

The PDIC now has the authority to help depositors have quicker access to their insured
deposits should their bank close; resolve problem banks while still open; hasten the
liquidation process for closed banks; and mete out stiffer sanctions and penalties against
those who engage in unsafe and unsound banking practices.
The PDIC is an attached agency of the Department of Finance.

WHAT IS PDIC’S OVERALL MANDATE?

PDIC exists to provide deposit insurance coverage for the depositing public to help promote
public confidence and stability in the economy. It ensures prompt payment of insured
deposits, exercises complementary supervision of banks, adopts responsive resolution
methods, and applies efficient management of receivership and liquidation functions.

WHAT ARE THE FUNCTIONS OF PDIC?

1) Deposit Insurer
2) Co-regulator of Banks
3) Receiver and Liquidator of Closed Banks

WHAT IS PDIC’S MAXIMUM DEPOSIT INSURANCE COVERAGE?

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.

Under R.A. No. 9576, the PDIC may propose to adjust the MDIC, subject to the approval of
the President of the Philippines, in case of a condition that threatens the monetary and
financial stability of the banking system that may have systemic consequences.

WHAT TYPES OF DEPOSITS ARE INSURED BY PDIC?

Except for the exclusions stipulated in RA 9576, deposits of all commercial banks, savings and
mortgage banks, rural banks, private development banks, cooperative banks, savings and
loan associations, as well as branches and agencies in the Philippines of foreign banks and
all other corporations authorized to perform banking functions in the Philippines, are insured
with PDIC. As for Philippine banks with branches outside the country, RA 9576 stipulates that
subject to the approval of the Board of Directors, any insured bank with branch outside the
Philippines may elect to include for insurance its deposit obligations payable at such branch.

Foreign currency deposits are also insured by PDIC pursuant to RA 6426 (“An act instituting a
foreign currency deposit system in the Philippines, and for other purposes”) and Central Bank
(CB) Circular No. 1389. Depositors may receive payment in the same currency in which the
insured deposit is denominated.
Exclusions from deposit insurance coverage as stipulated in R.A. No. 9576:

1) Investment products such as bonds, securities and trust accounts;

2) Deposit accounts which are unfunded, fictitious or fraudulent;
3) Deposit products constituting or emanating from unsafe and unsound banking
practices;
4) Deposits that are determined to be proceeds of an unlawful activity as defined under
the Anti-Money Laundering Law.

IF I HAVE DEPOSITS IN SEVERAL DIFFERENT INSURED BANKS, WILL MY DEPOSITS BE ADDED

TOGETHER FOR INSURANCE PURPOSES?

No. Deposits in different banking institutions are insured separately. However, if a bank has
one or more branches, the main office and all branch offices are considered as one bank.
Thus, if you have deposits at the main office and at one or more branch offices of the same
bank, the deposits are added together when determining deposit insurance coverage, the
total of which shall not exceed P500,000.

HOW IS INSURANCE COVERAGE DETERMINED?

In determining the insured amount, the outstanding balance of each account is adjusted,
such that interests are updated, withholding taxes are deducted, accounts maintained by a
depositor in the same right and capacity are added together; and whenever applicable,
unpaid loans and other obligations of the depositor are deducted; and in no case shall
insured deposit exceed P500,000.

R.A. No. 9576 stipulates that PDIC will not pay deposit insurance for the following accounts or
transactions:

1) Investment products such as bonds, securities and trust accounts;

2) Deposit accounts which are unfunded, fictitious or fraudulent;
3) Deposit products constituting or emanating from unsafe and unsound banking
practices;
4) Deposits that are determined to be proceeds of an unlawful activity as defined under
the Anti-Money Laundering Law.
HOW LONG DOES IT TAKE PDIC TO SETTLE A CLAIM FOR INSURED DEPOSIT?

PDIC aims to pay valid claims as soon as possible. Prior to payout, claims are examined
thoroughly. This is to protect the Deposit Insurance Fund (DIF) which is the source of insurance
payments. Sometimes, depositors mistakenly assume that the payouts are sourced from their
deposits. This is not the case. The payouts are from PDIC’s own funds.

The claim for insured deposit should be settled within six (6) months from the date of filing
provided all requirements are met but the claim must be filed within twenty-four (24) months
after bank takeover. The six-month period shall not apply if the documents of the claimant
are incomplete or if the validity of the claim requires the resolution of issues of facts and law
by another office, body or agency, independently or in coordination with PDIC.

IF THE DEPOSIT ACCOUNT IN A CLOSED BANK IS MORE THAN P500,000.00, WHAT HAPPENS TO
THE EXCESS OF THE MAXIMUM AMOUNT OF INSURED DEPOSIT?
The claim for the uninsured portion of the deposit is a claim against the assets of the closed
bank.

The claim may be filed with the Liquidator of the closed bank within sixty (60) days from
publication of notice of closure. However, payment of said claim will depend on the bank’s
available assets and approval of the Liquidation Court. The schedule of payment beyond
the P500,000.00 maximum insurance shall be based on priorities set by law.

(Source: http://www.pdic.gov.ph/?nid1=6)