Lawmakers laud hike in deposit insurance
MANILA, Philippines — Two lawmakers at the House of Representatives on Sunday lauded the “long overdue” increase to P1 million of the bank deposit insurance, a move seen to further boost public confidence in the country’s banking system.
Manila Rep. Joel Chua, a member of the House committee on economic affairs, commended the Philippine Deposit Insurance Corp. (PDIC) for issuing a memorandum raising to P1 million the maximum deposit insurance coverage (MDIC) for bank deposits beginning March 15.
READ: PDIC doubles deposit insurance to P1M
Depositor confidence
Makati City Rep. Luis Campos Jr. said the hike in deposit insurance coverage would encourage Filipinos to continue keeping their money in banks. He was one of the congressmen during the 18th Congress who successfully pushed for the enactment of Republic Act No. 11840, which allowed the PDIC to adjust the MDIC every three years.
While Chua lauded the PDIC, he urged the agency to strengthen its receivership operations to assure depositors in small- and medium-sized banks that stronger governance and accountability measures were in place.
“Although some banks are placed in PDIC receivership every year, the adversely affected depositors number in the thousands,” he said.
“Closed banks worsen the unbanked situation of the country, especially in the countryside where small entrepreneurs and depositors are the casualties,” he added.
Chua stressed that as of Dec. 31, 2023, there were 369 under liquidation by PDIC, and “328 of those had no fixed asset distribution plans yet.”
P282M in paid claims
The PDIC disbursed some P281.5 million in deposit insurance claims to 7,482 account holders of three distressed rural and cooperative banks last year.
“The 100-percent increase in the MDIC to P1 million per depositor per bank is long overdue,” Campos said.
“There’s no doubt the P1 million MDIC will help strengthen public confidence in our banking system, which plays a vital role in driving the country’s economic growth and [job] creation,” he added.
Campos authored House Bill No. 5812, seeking to increase the MDIC in the 18th Congress, which lapsed into law as RA 11840 in July 2022, as an amendment to the PDIC charter.
According to Campos, “Based on cumulative inflation data, the purchasing power of P1 million today is more or less equal to the buying power of P500,000 in 2009, or 16 years ago.” The MDIC was last increased in 2009, from P250,000 to P500,000.
“This is the first time the PDIC has exercised its authority to increase the MDIC,” he said. He also explained [that] Congress had been periodically increasing the MDIC since 1963 until the enactment of RA 11840, which granted the PDIC’s governing board authority to increase the MDIC.
