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PDIC notes

The Philippine Deposit Insurance Corporation (PDIC) is a government entity established to protect bank depositors and ensure financial stability, providing deposit insurance coverage of up to P500,000 per depositor per bank, which will increase to P1,000,000 in March 2025. PDIC functions as a deposit insurer, co-regulator of banks, and liquidator of closed banks, covering valid deposits while excluding certain accounts like investment products and fraudulent transactions. Membership is mandatory for all operating banks in the Philippines, and depositors do not pay insurance premiums, as these are covered by the banks.

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14 views4 pages

PDIC notes

The Philippine Deposit Insurance Corporation (PDIC) is a government entity established to protect bank depositors and ensure financial stability, providing deposit insurance coverage of up to P500,000 per depositor per bank, which will increase to P1,000,000 in March 2025. PDIC functions as a deposit insurer, co-regulator of banks, and liquidator of closed banks, covering valid deposits while excluding certain accounts like investment products and fraudulent transactions. Membership is mandatory for all operating banks in the Philippines, and depositors do not pay insurance premiums, as these are covered by the banks.

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aragdon.136498100036
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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What is the Philippine Deposit Insurance Corporation (PDIC)?

- The Philippine Deposit Insurance Corporation (PDIC) a government instrumentality that was
established on June 22, 1963 by Republic Act 3591. The law underwent amendments by R.A.
9302 [August 12, 2004] and R.A. 9576 [April 29, 2009]).
- Under its Charter, the corporation is mandated to give bank depositors protection and financial
stability by providing permanent and continuing deposit insurance.

What does the PDIC do?


The Philippine Deposit Insurance Corporation has three basic functions: 1. Deposit insurer.
2. Act as co-regulator of banks. (alongside w/ BSP)
3. Receiver and liquidator of closed banks.

What is maximum deposit insurance coverage of PDIC?


- Since June 2009, the Maximum Deposit Insurance Coverage or MDIC is P500,000 per
depositor per bank.
- All deposit accounts by a depositor in a closed bank maintained in the same right and capacity
shall be added together.
- PDIC may propose to adjust MDIC, subject to approval of the President.

Simply, this means if a bank closes, then you can get up to P500,000 back from the PDIC. If you
had P100,000 in a savings account upon the time the bank closed, then you’ll get all of the
P100,000 back from the PDIC. However, if you had P700,000 in the account, then you will only
get the MDIC or P500,000 back.

- Recently, PDIC announced the increase of MDIC from 500,000 to 1,000,000 and this increase
will take effect in March 15, 2025.

What are covered by the PDIC Deposit Insurance?


- PDIC insures valid deposits in domestic offices of its member-banks. Deposits are considered
valid if, upon determination by PDIC, are recorded in the bank’s records, and are evidenced by
inflow of cash.

-Insured Deposit
​ - amount due to any bonafide depositor for legitimate deposits in an insured bank net of
any obligation of the depositor to the insured bank as of date of closure (not exceeding MDIC)
​ - Joint Account shall be insured separately from any individually-owned deposit
account. (ex. JA worth 2M, each acc holder entitled to 1M (with MDIC as limit to be insured) in a
way 2 MDIC yung pede sa isang Joint Account.

Classification of Insured Deposits:


By Deposit Types:
▪ Savings
▪ Special Savings
▪ Demand / Checking
▪ Negotiable Order of Withdrawal (NOW)
▪ Time Deposits

By Deposit Account:
▪ Single Account
▪ Joint Account
▪ Account “By”, “In Trust For” (ITF), and “For the Account of” (FAO)

By Currency:
▪ Philippine Peso
▪ Foreign currencies considered as part of BSP’s international reserves

Which banks are members of the PDIC?


- All operating banks (incorporated under Philippine Laws) are members of the PDIC.
Membership is mandatory. So this includes commercial banks, savings banks, mortgage
banks, development banks, rural banks, and cooperative banks. In addition, stock savings and
loan associations are also included; as well as domestic branches of foreign banks.

What specific risks to a bank does PDIC cover?


- The Philippine Deposit Insurance Corporation covers only the risk of a 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.

Do you need to pay any insurance premium to the PDIC to be covered?


- No. The insurance premium is paid by the banks, not by the depositors.

What is NOT covered by the PDIC Deposit Insurance?


- Republic Act No. 9576 stipulates that PDIC will not pay deposit insurance for the following
accounts or transactions:

▪ Investment products such as bonds, securities and trust accounts.


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

What is my PDIC deposit insurance coverage if I have several types of accounts in a


bank?
- Your PDIC insurance coverage will not increase and will be up to P500,000 in total. The
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. Let us say that you have P1M in a savings account in Bank Alpha, and
another P1M in a checking account also in Bank Alpha. If Bank Alpha closes, you will only get a
total of P500,000 from PDIC.

If I have deposits in different banks, what is my PDIC deposit insurance coverage?


- It will be up to P500,000 per bank. 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 can I claim PDIC deposit insurance if my bank closes?


- Depositors will be advised through media and posters at the premises of the closed bank on
the schedule of distribution of claim forms by PDIC, receiving of claim forms by PDIC, and the
prescriptive date of filing claims by the depositors. The depositor must then file his deposit
insurance claim within 24 months from the date of bank takeover. Failing to do so will forfeit their
right to get the insured amount from the PDIC. However, they may still make a claim against the
assets of the closed bank.

If the deposit account in a closed bank is more than the MDIC, 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
MDIC 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 but payment of the said claim will
depend on the bank's available assets to settle its preferred claims (Government taxes, labor
claims, secured credits and trust funds) and approval of the Liquidation Court. The schedule of
payment beyond the P500,000.00 maximum insurance shall be base.
Republic Act No. 10846

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