PDIC chief allays concerns over deposit insurance fund

MANILA, Philippines — The Philippine Deposit Insurance Corp. (PDIC) has reassured the public that its Deposit Insurance Fund remains adequate even after the Marcos administration reallocated P107.23 billion of the DIF to support economic growth projects.

In a chance interview with reporters on the sidelines of the Annual Reception for the Banking Community, PDIC president and CEO Roberto Tan addressed concerns about the fund’s reduced size.

“The adequacy is more than what the directors targeted for that. So it’s in good shape. So I don’t think there’s anything to be alarmed about,” he said.

The PDIC earlier remitted P107.23 billion, in compliance with the congressional mandate under the General Appropriations Act of 2024 and in accordance with the opinion rendered by the Office of the Government Corporate Counsel.

Following the move, concerns were raised on whether reallocating the funds would negatively impact the PDIC’s ability to carry out its mandate.

“We assure the public that after the remittance, the DIF of the PDIC remains adequate to cover risks in the banking system and that the PDIC is still capable of delivering its services effectively, in case of insurance calls,” Tan said.

“The DIF continues to be maintained within the target level set by its board of directors based on international best practices,” he also said.

According to Tan, the DIF currently exceeds P250 billion, an amount he described as “more than enough” to meet the institution’s obligations to insured depositors.

He also clarified that there would be no additional contributions to the National Treasury moving forward.

In a statement on Sunday, the Department of Finance (DOF) said that the remitted funds would support government-wide efforts to boost the economy by funding the national government’s priority projects.

“These projects will spur more economic activities that are expected to lead to higher deposits in banks and the growth of financial institutions to provide more financial products and services to Filipinos nationwide,” the DOF said.

The PDIC is exploring to increase the maximum deposit insurance coverage, which has remained at P500,000 per depositor since 2013.

Tan said a study on the matter has already been completed and the PDIC Board is deliberating on the findings.

“The recommendation is to increase it,” Tan said, without specifying the proposed amount. He cited inflation as the primary driver for the adjustment, pointing out that the present value of the current coverage has significantly eroded since it was last updated.

The timeline for the decision is expected within the first half of the year, with implementation details to follow.

In response to concerns about moral hazard – where a higher insurance coverage might encourage riskier behavior among banks – Tan said the PDIC is closely working with the Bangko Sentral ng Pilipinas.

The PDIC promotes and safeguards the interests of the depositing public by providing insurance coverage on all insured deposits.