In a press briefing last week, BAP president Cesar EA Virata said the higher insurance coverage "would benefit nearly 30 million depositors in the country covering 96 percent of the total deposits in the banking system from the present 91 percent."
Virata however placed particular concern on possible scams by unscrupulous depositors or individuals who may take advantage of the higher cover. He called for measures to be included in the proposed law or the subsequent implementing rules and regulations (IRR).
The bill amends PDIC’s charter not only to increase the MDIC but also to enhance its risk management capabilities by restoring the authority to examine member-banks in coordination with the Bangko Sentral ng Pilipinas (BSP).
Increased examination powers would ensure that banks strictly comply with the regulations on bank deposit list.
The issuance of certificate of deposits must also be strictly monitored, he added.
"Payments for insured deposits is usually hampered by the delayed submission of depositors list by banks. The restoration of the examination powers would facilitate process of validation before actual payment of claims for insured deposits," the BAP head explained.
"I suppose when the PDIC obtains its powers to examine directly, it will be able to get more information about the banks and their depositors," he added
Virata however made it clear that the BAP will not support the bill if it means additional costs for banks. Banks are slapped an assessment rate by the PDIC equivalent to 20 basis points or one-fifth of one percent of a member bank’s total deposit liabilities.
"We do not support the bill if it will increase the fees on banks," he stressed.
Last week, the Chamber of Thrift Banks (CTB) and the Rural Bankers Association (RBAP) had issued separate statements making it clear that they supported the bill but likewise took the position that it should not result in an increased assessment rate.
Both chambers of Congress introduced separate bills increasing among others the MDIC. The Senate approved its version in February this year.
However, the House failed to complete its version before it went into recess for the national elections.
The only chance that the bill will be passed into law is that the House ratifies it before the end of regular session this month. That will allow the measure to be signed into law by President Arroyo before the next Congress is convened.
Failure of the legislation to be transformed into law would result in the refilling of the bill which could take months or even longer.
However, there are reports that a certain lobby is ongoing to reduce the extent of the examination powers of the PDIC embodied in the bill.