What is the Philippine Deposit Insurance Corporation (PDIC)?

PDIC is a government-owned and controlled corporation created in 1963 by virtue of

Republic Act 3591 for the purpose of insuring bank deposits. The latest amendments
to RA 3591 are contained in RA 9302 enacted on July 27, 2004, which provided
enhanced depositor protection through increased deposit insurance coverage up to
P250,000 and strengthened PDIC's risk management capabilities through the
restoration of PDIC's authority to examine member banks with prior approval by the
Monetary Board. The new law also enhanced PDIC's receivership and liquidation
powers.

The PDIC is an attached agency of the Department of Finance.

What is PDIC’s overall mandate?

To provide depositor protection and strengthen public confidence in the banking

system to foster financial stability.

What are the functions of PDIC?

A. Insurance

The PDIC assesses and collects insurance assessments from member-banks to insure
member-banks’ deposit accounts. In case of bank closures, the PDIC processes
and services claims for insured deposits. Deposits are insured up to a maximum
coverage of P250,000 per depositor.

B. Bank Examination

Under the new law, PDIC's authority to examine its member banks, with prior
approval by the Monetary Board, has been restored.

C. Bank Rehabilitation

The PDIC may grant financial assistance to distressed banks if it is proven to be a less
costly alternative than closure.

D. Receivership of closed banks

Once a bank is ordered closed by the Monetary Board (MB) of the Bangko Sentral ng
Pilipinas, the PDIC is designated as statutory receiver. The PDIC upon receipt of the
MB resolution ordering the closure of a bank, immediately physically takes over the
closed bank. Receivership is the stage within which the PDIC manages the affairs of
the closed bank and preserves its assets for the benefit of creditors.

E. Liquidation of closed banks

After it is determined that the closed bank can not be rehabilitated, the PDIC shall
recommend the liquidation of the assets of the closed bank. Liquidation refers to the
recovery and conversion of assets into cash for distribution to all creditors in
accordance with the order of creditor preference pursuant to law.

What is PDIC’s maximum deposit insurance coverage?

The maximum deposit insurance coverage is P250,000 per depositor. All deposit
accounts by a depositor in a closed bank maintained in the same right and capacity
shall be added together.

What is an insured deposit?

deposit is the net amount due to any depositor for deposits in an insured bank, after
deducting unpaid loans and other obligations of the depositor to the closed bank. In no
case shall insured deposit exceed P250,000 per depositor.

Are all banks members of PDIC?

Membership of banks to PDIC is mandatory, hence, all operating banks are members
of PDIC. Under the new law, PDIC's power to terminate insured status of banks has
been revoked.

What types of deposits are insured by PDIC?

All peso and foreign currency savings deposit accounts, time deposit accounts, current
or demand deposit or checking accounts in a bank are insured with PDIC.

What specific risks to a bank does PDIC cover?

PDIC covers only the risk of bank closure ordered by the Monetary Board. Thus, bank
losses due to theft, fire, closure by reason of strike or existence of public disorder,
revolution or civil war, are not covered by PDIC.

Are the deposits of all banks insured with PDIC?

Yes. 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.
But PDIC insurance only covers deposits in banks located in the Philippines. Deposits
in overseas branches of local banks are not insured with PDIC.

Sec. 9 of RA 6426 (‘An act instituting a foreign currency deposit system in the
Philippines, and for other purposes") and Sec. 79 of Central Bank (CB) Circular No.
1389, dated August 13, 1993, mandate that foreign currency deposits shall be insured
under the provisions of RA 3591, as amended. Under CB Circular No. 1389,
depositors are entitled to receive payment in the same currency in which the insured
deposit is denominated.

Shall the depositor pay any insurance premium to PDIC?

No. Insurance premium is paid by the banks, not by the depositors. The bank is
assessed 1/5 of 1% per annum of the assessment base of the bank as insurance
assessment.

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 P250,000.

Can PDIC insurance coverage be increased by having several accounts in the

same name in an insured bank?

No. Deposit insurance coverage is not determined on a per-account basis. The type of
account (whether checking, savings, time or other form of deposit) has no bearing on
the amount of insurance coverage.

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 P250,000.

Is there a need for a depositor to file his claim for insured deposit with PDIC?

Yes. Depositors will be advised through the national and/or local media and posters at
the premises of the closed insured bank and other public places within the locality on
the schedule of claims servicing and the prescriptive date of filing claim.

When should the depositor of a closed insured bank file his claim with PDIC?
The depositor of the closed insured bank should file a claim for his insured deposits
within twenty-four (24) months from date of bank closure.

What happens when the depositor of a closed bank fails to file his claim within
the 24-month period?

All rights of the depositor with respect to the insured deposit shall no longer be
honored but his rights against the closed bank subsists.

How long does it take PDIC to settle a claim for insured deposit?

The claim for insured deposit should be settled within six (6) months from the date of
filing but the claim must be filed within twenty-four (24) months after bank closure.
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, idependently or in coordination with PDIC.

What processes are involved before PDIC starts servicing claims?

Deposit records are subjected to an examination prior to the start of

servicing/settlement of claims. As soon as the pre-settlement examination is
completed, PDIC shall schedule the servicing of claims.

How long does the pre-settlement examination take?

The length of time needed for the pre-settlement examination of deposit liabilities of a
closed insured bank largely depends on the completeness and accuracy of records
turned over by the Bank to PDIC and the number of deposit accounts to be examined.
On the average, claims servicing for banks with problematic records starts 2-3 months
after takeover by PDIC.

If the deposit account in a closed bank is more than P250,000.00, what happens
to the excess of the maximum amount of insured deposit?

If the closed bank is not rehabilitated or taken over by another bank, amount in excess
of the P250,000 coverage can still be claimed upon the final liquidation of the
remaining assets of the closed bank. The claim may be filed with the Liquidator of the
closed bank.

However, if the closed bank is rehabilitated, the excess deposits are usually assumed
by the rehabilitator.

What is the order of priorities for the payment of claims in excess of the
P250,000.00 maximum insurance coverage?
The schedule of payment beyond the P250,000.00 maximum insurance shall be based
on priorities set by law.

Under the law, claims for deposit in excess of the insured P250,000.00 will be settled
together with claims of other ordinary creditors, after preferred claims like
government taxes, labor claims, secured credits and trust funds are settled.