PDIC to Push for Full Deposit Insurance Coverage
Posted on November 28th, 2008
The deposit insurance of the Philippine Deposit Insurance Corp. (PDIC) is currently pegged at a maximum of P250,000. This means that even if your money in the bank exceeds P250,000, you can only claim up to P250,000 in the event that there is a bank run. This limitation in insurance makes the depositors cautious of putting more money in the bank , and instead find other venue for other money to earn.
This is the reason why the PDIC is pushing for a full insurance coverage of the depositor’s money in the bank regardless of amount. This will help boost confidence in the banking industry. PDIC president Jose Nograles said that bank deposits in many countries has no limit on their insurance, “That’s one way of preserving depositor’ confidence,†he added.
Currently though, there are several bills in the House of Representatives and the Senate which seeks to increase the maximum amount of deposit insurance to P1 million. Although Nograles said that they (PDIC) is supporting the bills, he said that it would still be better if the government could cover all deposits.
PDIC officials are already talking with the Department of Finance and some legislators to push for the full coverage of the bank deposits. “The government must be able to provide whatever is needed to ensure stability of the system, and this may include the provision of blanket [insurance] coverage, meaning all deposits,†Nograles said
By gaining the confidence of depositors through full insurance coverage of deposits, it will help the domestic banking system to avoid the adverse effects of the global financial crisis. This, in spite of the country’s healthy banking system.
Nograles is also asking to be given power to take over management of banks that can no longer service withdrawals of its clients. Currently, Bangko Sentral ng Pilipinas (BSP) has this authority, wherein they come in and shut down bankrupt banks. Nograles believes that to avoid panic among depositors, bankrupt banks will continue to operate under PDIC until all its assets are sold.
