Will Congress forget?

After all the brouhaha about Congress finally passing a bill increasing the maximum insured deposit coverage from P100,000 to P250,000, it remains a piece of paper as it has not been signed into law.

The problem is that the House of Representatives failed to ratify the bill after it got the nod of the bicameral committee. Industry sources said that the delay was due to the pressure on the Lower House to ratifying its backlog of bills that also need to be ratified.

Congress is now in recess and with the hysteria over the national elections in full swing, it seems that the depositing public will remain unprotected for the next couple of years.

However, House Speaker Jose de Venecia was quoted to have promised that it would be ratified at the resumption of Congress in May. The 12th Congress will reconvene to declare the winners of the national elections, and that would be the remaining window of opportunity to ratify the bill, which would then be forwarded to Malacañang for signing into law.

"It would be regrettable and unfortunate if the new maximum insured deposit coverage of P250,000 would not be signed into law this Congress," said Leonilo Coronel, executive director of the Bankers Association of the Philippines (BAP). The BAP represents all the domestic commercial banking industry.

Coronel said that in the event that it fails to be signed into law this Congress, the bill would have to be refilled with the 13th Congress. It is common knowledge that a refilled bill would take years again before it could have another shot at turning into law.

For the meantime, depositors would remain insured for a mere P100,000. The amount was set in 1992, which today is worth less than half of the face value.

"Why deprive the potential and existing bank depositors of sufficient protection?"

The Rural Bankers Association of the Philippines (RBAP) also expressed concern that further delays may again deprive the depositing public of protection from bank failures or closures.

RBAP president Daniel Arcenas said that failure to increase the deposit insured amount would erode the confidence of the countryside and small depositors.

"It may force the public to turn to the informal sector and the financial scams," Arcenas warned. "The poorer rural and urban countryside depositors need ample protection."

The proposed maximum insured deposit amount of P250,000 will not affect the banking sector so long as bank failures are avoided. But under a worse case scenario, it would ensure sufficient protection for the public.

Chamber of Thrift Banks (CTB) president Tom Clemente sung a different tune as he merely prayed that the proposed increase in insured deposit coverage would not mean higher premiums for the banks to the PDIC. "The public must be amply protected but we hope it does not penalize the banks," he added.

Part of the amendments proposed by the bill provides for increased sanctions and penalties to erring bank owners/officials for violation of unsafe and unsound banking practices, reportorial requirements and other PDIC rules and regulations. The proposed administrative sanction provide for fines up to P300,000 per banking day, while the penalty of prision mayor (six years and 1 day to 12 years) or a fine of not less than P50,000 but not more than P2,000,000 or both, are prescribed for criminal liabilities.

Last month, Congress agreed to pass a bill that enforces amendments to the charter of the Philippine Deposit Insurance Corp. (PDIC), the government body that protects the banking public. It reached the bicameral committee level, which was also attended by representatives of the private sector.

Earlier delays were caused by a difference in the amount insured. The Lower House wanted to hike the insurance coverage to P400,000, while the Senate preferred to double the current limit to P200,000.

The bill also restores the power of the PDIC to examine banks and to extend financial assistance such as loans and equity investments under certain conditions. The General Banking Law of 2000 repealed this power and gave the Bangko Sentral ng Pilipinas (BSP) the sole authority to examine banks.