In Focus:

The Philippine
Deposit Insurance
System

he Philippine Deposit Insurance Corporation (PDIC) is a government instrumentality created on

June 22, 1963 by Republic Act 3591 entitled, An Act Establishing the Philippine Deposit Insurance
Corporation (PDIC), Defining Its Powers and Duties and for Other Purposes.

PDIC was created to promote and safeguard the interests of the depositing public by way of providing
permanent and continuing insurance coverage on all insured deposits. The PDIC also aims to strengthen the
mandatory deposit insurance coverage system to generate, preserve, and maintain faith and confidence in
the countrys banking system, and protect it from illegal schemes and machinations.

Mandate
Consistent with its public policy objectives, the PDIC has the following mandates:
I. Deposit Insurance. The Corporation provides maximum deposit insurance coverage of
Php500,000. Member-banks are assessed annually at a flat rate of 1/5 of 1% of their total
deposit liabilities. The assessments are collected from member-banks semi-annually and
form part of PDICs Deposit Insurance Fund (DIF).
II. Examination and Resolution. The PDIC works closely with the Bangko Sentral ng Pilipinas
(BSP) in strengthening and maintaining the stability of the banking system. PDIC is
authorized to issue regulations to implement its Charter, conduct bank examinations
and investigations to determine banks financial health and their adherence to rules and
regulations on banking and deposit insurance, and extend financial assistance to eligible
distressed banks.
III. Receivership and Liquidation. The PDIC is the statutory receiver and liquidator of closed
banks. Upon order of the Monetary Board of the BSP, PDIC takes over closed banks;
administers their assets, records and affairs; and preserves and disposes these assets for
the benefit of the closed banks creditors. When the Monetary Board orders the liquidation
of a bank that has been placed under receivership, the assets are managed and distributed
to creditors according to the preference and concurrence of credits as provided by the Civil
Code of the Philippines.
Membership
Membership with PDIC is mandatory for all banks licensed by the BSP to operate in the Philippines:
Banks incorporated under Philippine laws, such as commercial banks, savings bank,
mortgage banks, rural banks, development banks, cooperative banks, and stock savings
and loan associations
Domestic branches of foreign banks
Scope of Deposit Insurance Protection
PDIC provides deposit insurance of up to Php500,000 per depositor per bank. It covers all types
of bank deposits in member-banks whether denominated in local or foreign currencies. As of
December 31, 2013, total deposits in the banking system amounted to Php7.6 trillion involving
a total of 45.4 million deposit accounts. Of these deposit accounts, 96.7% are fully covered by
deposit insurance.

Philippine Deposit Insurance Corporation 2013 Annual Report

PDIC insures valid deposits in domestic offices

of member-banks:

By Deposit Type:

Savings
Special Savings
Demand/Checking
Time Deposits

By Deposit Account:

The following accounts or transactions are not

covered by deposit insurance whether denominated,
documented, recorded or booked as deposits
by the bank:

i.

Investment products such as bonds and

securities, trust accounts, and other similar
instruments;

ii.

Deposit accounts or transactions which are

unfunded, or that are fictitious or fraudulent;

iii.

Deposit accounts or transactions constituting,

and/or emanating from, unsafe and unsound
banking practice/s1, as determined by the
Corporation, in consultation with the BSP,
after due notice and hearing, and publication
of a cease and desist order issued by the
Corporation against such deposit accounts or
transactions; and

iv.

Deposits that are determined to be the

proceeds of an unlawful activity as defined
under Republic Act 9160, as amended.

Single Account
Joint Account
Account By, In Trust For (ITF) or
For the Account of (FAO) another person
By Currency:
Philippine peso
Foreign currencies considered as part
of international reserves at the BSP

Under PDIC Regulatory Issuance No. 2011-01, the PDIC shall deem a deposit-related practice, activity, transaction, or omission to be an unsafe and/or
unsound banking practice when it has resulted or may result in:

1.

Unreasonable delay in the processing or determination of the validity of deposit claims in the event of bank closure; or

2.

Material loss or damage or abnormal risk to the banks depositors, creditors, shareholders, or to the PDIC; or

3.

Material loss or damage or abnormal risk or danger to the safety, stability, liquidity, or solvency of the bank.

The following activities may be considered unsafe and/or unsound deposit-related practices:
1.

Deposit-related practice/activity/transaction without the approval or adequate controls required under existing laws, rules and regulations;

2.

Failure to keep bank records within bank premises;

3.

Grant of high interest rates, when bank has: a) negative unimpaired capital or b) liquid assets to deposit ratio of less than 10% or an operating
loss;

4.

Non-compliance with PDIC regulations; or

5.

Other deposit-related practices, activities, and transactions that may be identified through appropriate issuances.

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