Philippine Deposit Insurance Corporation (PDIC)

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 9576 signed into law on April 29,
2009. RA 9576 increased the maximum deposit insurance coverage to P500,000.00. 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 determine which deposit products are covered by
insurance. The PDIC is also authorized to conduct independent special examination of
banks and may inquire into or examine deposit accounts of ailing banks in the event
there is a finding of unsafe and unsound banking practices.

Part of the financial strengthening measures for the PDIC, on the other hand, include
exemption from taxes and the authority to issue sovereign bonds, debentures and other
debt issuances.

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

What is PDICs overall mandate?

PDIC exists to provide permanent and continuing 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?

Deposit Insurer
Co-regulator of Banks
Receiver and Liquidator of Closed Banks

What is PDICs 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.

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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 is an insured deposit?

The term insured deposit means the amount due to any bona fide depositor for
legitimate deposits in an insured bank net of any obligation of the depositor to the
insured bank as of date of closure, but not to exceed P500,000.00.

A joint account shall be insured separately from any individually-owned deposit account.

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.

Are all banks members of PDIC?

Membership of banks to PDIC is mandatory; hence, all operating banks are members of
PDIC.

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

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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.

Are deposits maintained in branches and subsidiaries of foreign banks

operating in the Philippines insured by the PDIC?

Yes, the PDIC Charter provides that the deposits in branches and subsidiaries of foreign
banks licensed by the Bangko Sentral ng Pilipinas (BSP) to perform banking functions in
the Philippines are insured by the PDIC.

Are deposits maintained in Philippine banks with branches outside the

Philippines insured by the PDIC?

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 Philippine Deposit Insurance Corporation (PDIC)

The PDIC Charter provides that a Philippine bank may elect to insure with the PDIC its
deposits in branches outside the Philippines. As of 31 December 2012, no Philippine
bank has elected to insure deposits in their foreign branches with PDIC.

To verify if your deposits in a branch of a Philippine bank outside the Philippines are
covered by deposit insurance in the host foreign country, please inquire with the
account officer of your branch.

What specific risks to a bank does PDIC cover?

PDIC 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.

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.

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:

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 Philippine Deposit Insurance Corporation (PDIC)

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.

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 P500,000.

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 distribution of claim forms by PDIC, receiving of claim forms by PDIC,
and the prescriptive date of filing claims by the depositors

When should the depositor of a closed insured bank file his claim with PDIC?

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 Philippine Deposit Insurance Corporation (PDIC)

The depositor of the closed insured bank has 24 months from date of bank takeover to
file his deposit insurance claim.

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 he may still make a claim against the assets of the closed bank.

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 PDICs 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.

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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. Claims are evaluated and processed according to PDIC's
standard procedures.

How long does the pre-settlement examination take?

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 Philippine Deposit Insurance Corporation (PDIC)

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.

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?

If the closed bank is not rehabilitated or taken over by another bank, amount in excess
of the P500,000 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 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 based on priorities set by law.