BSP and DOF Supports Bill Granting PDIC to Adjust Deposit Insurance Limits
The Bangko Sentral ng Pilipinas (BSP) and the Department of Finance (DOF) expressed their support for a bill allowing the Philippine Development Insurance Corporation (PDIC) to flexibly adjust the maximum deposit insurance coverage in the Philippines.
On Friday, March 19, the Senate Committee on Banks, Financial Institutions, and Currencies began its hearings for the two bills.
Both bills, Senate Bill (SB) No. 1260 and SB No. 3464, seek to introduce amendments that grant PDIC power to adjust the limit on deposit insurance coverage to assist the Philippine economy.
Finance Secretary Carlos Dominguez III stated, “The proposed amendments remove the tedious process of passing a law each time the maximum coverage needs to be adjusted. They will also do away with the requirement of a BSP-determined financial crisis to make a routine adjustment in the insurance coverage levels. In other words, the proposed bill will make the PDIC more responsive to the constantly changing financial landscape.”
Currently, PDIC provides a maximum deposit insurance coverage of ₱500,000 per depositor for each bank.
Under SB No. 3464, the PDIC Board of Directors may increase the maximum deposit insurance coverage to an amount deemed appropriate while considering various economic indicators and inflation. The bill was drafted by Senator Juan Edgardo “Sonny” M. Angara.
Additionally, BSP Governor Benjamin Diokno supported the proposal of granting the PDIC such power.
The Bankers Association of the Philippines President Jose Veloso added that “When indexed to inflation the ₱500,000 [deposit insurance] should be adjusted to ₱675,000. Determining the limit should be left to the board of the PDIC to allow for timely adjustments. Maximum limits should reflect the depositor profile and seek to protect the vast majority of depositors, with a focus on small ones.”
Moreover, Diokno noted, “Overall, the proposed amendments are reasonable. These will ensure that the PDIC will be fully capable of protecting our people’s hard-earned savings. The bill will also help in revitalizing our economy over the long term.”
The counterpart measure, House Bill (HB) No. 8818, was approved on second reading by the House of Representatives on March 8.