PDIC Law

• Philippine Deposit Insurance Corporation (PDIC)


  A government instrumentality created in 1963 by virtue of Republic Act 3591 to insure the deposits of all banks which are entitled to the benefits of Insurance. The PDIC is an attached agency of the Department of Finance.
• RA 10846 signed into law, empowering PDIC with stronger authorities to protect the depositing public and promote financial stability


  May 23, 2016
• PDIC's new authorities

  • Help depositors have quicker access to their insured deposits should their bank close
  • Resolve problems banks while still open
  • Hasten the liquidation process for closed banks
  • Mete out stiffer sanctions and penalties against those who engage in unsafe and unsound banking practices
• Insured deposits


  Depositors would have quicker access to their insured deposits in the event of bank closure since PDIC now has the authority to pay insured deposits without netting out depositors' loan obligations with the closed bank, based on evidence of deposits and not on the closed bank's records alone
• PDIC's enhanced resolution authorities

  • Able to more effectively promote financial inclusion through early intervention in problem banks or open bank resolution
  • In cases where bank closure becomes inevitable, enhanced the chances of recovery by creditors of their claims against the assets of the closed bank by preventing the further dissipation of these assets through seamless transition from bank closure to liquidation
• Liquidation process

  The new law does away with the 90-day receivership period and allows PDIC to proceed directly to liquidation<|>Immediate assignment of encumbered assets to closed bank creditors, adoption to purchase of assets and assumption of liabilities as a mode of liquidation and express prohibition on reopening of banks ordered closed by the Monetary Board of the Banko Sentral ng Pilipinas would help enhance recovery rate for creditors of closed banks
• Single account


  Individually-owned accounts held under one name, either as natural person (single proprietorship or individual) or juridical entity (corporation, partnership or cooperative)
• Joint account

  Accounts held under more than one name<|>Insured separately from single accounts<|>Unless a different sharing is stipulation in the deposit documents, the insured amount up to the Maximum Deposit Insurance Coverage of P500,000 shall be divided equally between or among co-owners
• Account "By", "In Trust For" (ITF) or "For the Account of" (FAO)"

  In a "By" account, the depositor is Ana<|>In an "In Trust For" (ITF) account, the depositor is Ben<|>In a "For the Account of" (FAO) account, the depositor is Ben
• To simplify: In the case where a depositor is the sole beneficial owner of a single, "For the Account of", "B", and "In Trust For" accounts, the consolidated balances of these accounts shall be insured up to P500,000
• The depositor's total shares in his/her joint accounts shall be separately insured up to P500,000
• A depositor with single accounts and joint accounts may have insured deposits of up to P1,000,000
• Deposits excluded from PDIC deposit insurance

  • Investment products such as bonds and securities, trust accounts and other similar instruments
  • Telegraphic note
  • Deposit accounts or transactions that are unfunded, fictitious or fraudulent
  • Deposit accounts or transactions that constitute and/or emanate from unsafe and unsound banking practices as determined by the PDIC, in consultation with the BSP, after due notice and hearing and publication of PDIC's cease & desist order against such deposit accounts/transactions
  • Deposit accounts or transactions that are determined to be proceeds of an unlawful activity as defined in the Anti-Money Laundering Act (Republic Act 9160, as amended)
  • Bank Deposits in Foreign Banks operating outside the Philippine territory or Bank Deposits in Foreign branch of domestic bank operating outside the Philippine territory
• Unsafe and unsound deposit-related activities

  • Deposit-related practice/activity/transaction without the approval of adequate controls required under existing laws, rules and regulations
  • Failure to keep bank records within bank premise
  • Granting high interest rates, when bank has: (1) negative unimpaired capital, or (2) liquid assets to deposit ratio less than 10%
  • Non-compliance with PDIC regulations
• Maximum Deposit Insurance Coverage

  P500,000 per depositor
• Illustrative examples

  • Fe Santos' insured deposit if she has 4 deposit accounts in the same bank: P500,000
  • Fe Santos' insured deposit if she has 3 joint accounts in the same bank: P500,000
  • Fe Santos' total insured deposit for all her single and joint accounts in the same bank: P1,000,000
• When are claims filed?

  1. Claims are filed during the claims settlement operations period, as announced in the Notice of Depository

  2. Depositors have two (2) years from PDIC's takeover of the closed bank to file their deposit insurance claims
• Who are required to file deposit insurance claims?

  • Depositors with valid deposit accounts with balances of more than P100,000
  • Depositors who have outstanding obligations with the closed bank regardless of amount of deposits
  • Depositors with account balances of less than P100,000 who have no updated addresses in the bank records or who have not updated their addresses through the Mailing Address Update Form (MAUF) issued by the PDIC
  • Depositors who maintain their accounts under the name of business entities, regardless of type of account and account balance
  • Depositors with accounts not eligible for early payment, regardless of type of account and account balance per advice of PDIC
• Who are the depositors that are not required to file deposit insurance claims?

  • Depositors with valid deposit accounts with balances of P100,000 and below are not required to file claims provided they have no obligations with the closed bank and have complete and updated addresses in the bank records or have updated these through the Mailing Address Update Form (MAUF) issued by the PDIC
• Steps in filing deposit insurance claims

  1. Prepare the required documents: original evidence of deposits, original copy of one valid photo-bearing ID, if depositor is below 18 years old - photocopy of birth certificate and valid IDs of parent, original copy of notarized Special Power of Attorney if claimant is not the signatory in bank records

  2. Submit the documents to PDIC representatives at the closed bank during Claims Settlement Operations or to the PDIC Public Assistance Center, or by mail to the Claim Processing Department of PDIC
• Who should sign the deposit insurance claim form?

  Depositor of the account (for depositors 18 years old and above)<|>Parent (if the depositor is below 18 years old)<|>Agent (in the case of "By" accounts)<|>Trustee (in the case of "In Trust for (ITF)" accounts)<|>Each Depositor (in the case of joint accounts such as "Or", "And/Or" or "And" accounts)
• Procedures for Claiming Insurance Proceeds

  1. Payment shall be made by PDIC as soon as possible, either by cash or by making available to each depositor a transferred deposit in another insured bank in an amount equal to insured deposit

  2. PDIC may require proof of claims before paying the insured deposit, and if not satisfied as to the validity of a claim, may require final determination of a court of competent jurisdiction before paying such claim

  3. Payment must be made within 6 months from the date of filing, otherwise the officers of PDIC will be liable for failure to pay if due to grave abuse of discretion, gross negligence, bad faith or malice
• PDIC shall be legally subrogated to all rights of depositor against the closed bank to the extent of such payment