BSP, PDIC to discuss deposit insurance

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is set to bring up with the Philippine Deposit Insurance Corp. (PDIC) the proposed hike in deposit insurance cover currently pegged at P500,000 amid higher risks faced by the banking sector amid the global health crisis.

BSP Governor Benjamin Diokno said during the 2020 virtual conference of the Chamber of Thrift Banks (CTB) he would elevate the proposal to the seven-member PDIC Board.

Diokno is a member of the board of directors of PDIC chaired by Finance Secretary Carlos Dominguez. “I’ll bring this up with the PDIC,” Diokno said.

PDIC was established in June 1963 through Republic Act 3591 to provide protection to depositors and help maintain stability in the financial system by providing deposit insurance.

CTB second vice president Francisco Dizon said during the panel discussion the deposit insurance coverage has remained at a level of P500,000 over the past 10 years.

The PDIC Charter was amended in April 2009, doubling the deposit insurance cover to P500,000 from P250,000 to ensure confidence in the country’s banking system after the global financial crisis in 2008.

“PDIC insurance coverage continues to remain at a level of P500,000 per deposit, where it has remained for approximately about 10 years now,” Dizon said.

Dizon said the amount should be raised to P750,000 or even P1 million given the higher risk faced by banks amid the COVID-19 pandemic.

This, Dizon said, would also boost confidence of the depositing public in the country’s banking system.

Diokno said the law provides a window to revisit the deposit insurance cover. “This decision would require a collegiate policy decision at the PDIC board and it has to be approved by the President,” Diokno added.

House Bill 5812 has been filed before the House of Representatives and Senate Bill 1260 has been filed before the Senate, both seeking to raise the maximum insurance protection to P1 million per depositor from the current level of P500,000.

Latest data from the central bank showed total resources of the banking sector rose by 8.4 percent to P18.8 trillion as of end-July on the back of the two-digit 10.5 percent rise in deposits.

Diokno earlier said the banking system entered the COVID-19 crisis with sound fundamentals and strong risk governance as evidenced by the sustained growth in assets, loans, deposits, capital, and profit across banking groups.