PDIC doubles bank deposit insurance to P1M
The Philippine Deposit Insurance Corp. (PDIC) will double the protection for bank deposits, marking the first adjustment in 16 years to account for inflation and attract more funds.
In a memorandum dated Feb. 27, the state insurer—which is mandated to guard Filipinos’ bank savings—announced an increase in the maximum deposit insurance coverage (MDIC) to P1 million per depositor per bank, twice the previous MDIC of P500,000.
At the new MDIC, insured funds will increase to P4.8 trillion. That represents 24.5 percent of total deposits amounting to P19.5 trillion, up from the 18.3 percent ratio under the old insurance coverage.
The bigger MDIC will take effect on March 15, marking another adjustment after the last one in 2009, when the insurance coverage was also doubled from P250,000 to P500,000 through an earlier amendment to the PDIC charter.
The PDIC charter was amended again in 2022 to allow the state insurer to adjust the MDIC based on inflation and other relevant economic indicators without the need for a new law. But the amendments at the time kept the MDIC at P500,000 while giving the PDIC board the power to adjust the amount.
Timely move
The law says the MDIC may be adjusted “in case a condition occurs that threatens the monetary and financial stability of the banking system that may have systemic consequences.” Any change of the MDIC must have the PDIC board’s unanimous vote.
Also, the MDIC is up for revisiting every three years and the PDIC board of directors is authorized to increase it, if necessary, with the approval of the President.
Sought for comment, Jose Teodoro Limcaoco, president of the Bankers Association of the Philippines (BAP) and Ayala-led Bank of the Philippine Islands, welcomed the expansion of MDIC.
“It’s a timely move given that limits have not been increased in years,” Limcaoco told the Inquirer.
No increase in premium
Depositors do not pay for deposit insurance, as the premium is shouldered by the banks. Based on PDIC rules, the regular assessment rate shall be one-fifth of 1 percent a year of the total deposit liability of a bank.
According to PDIC president and CEO Roberto Tan, the fresh hike in the MDIC would not result in higher fees for banks. “The current assessment premium will be retained,” he told the Inquirer.
BSP Governor Eli Remolona Jr. earlier said that beefing up the protection for bank deposits would unlikely create a moral hazard, as he stressed the need to make the local deposit insurance system ready for systemic risks.
Data showed the PDIC disbursed P281.5 million in deposit insurance claims in 2024, which benefited the depositors of three troubled rural and cooperative banks that had been shuttered by regulators.
