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Understanding Deposit Insurance of Philippine Deposit Insurance Corporation (PDIC)


Here's a basic information on the scope of deposit insurance and the application of the maximum deposit insurance coverage.

Source: Philippine Deposit Insurance Corporation
Disclaimer: We are not connected in any way with PDIC and this article is for informational purposes only. 

Maximum Deposit Insurance Coverage (MDIC)

PDIC pays deposit insurance on all valid deposits up to the Maximum Deposit Insurance Coverage (MDIC) of P500,000 per depositor of a closed bank. For purposes of computing deposit insurance, accounts maintained in the same right and capacity for a depositor's benefit, whether in his own name or in the name of others, are added together and in no case shall exceed the MDIC.

Deposits are considered valid if, upon determination of PDIC, these deposits are recorded in the bank's records, and are evidenced by inflow of cash.

What  are covered by PDIC deposit insurance?

PDIC insures valid deposits in domestic offices of its member-banks, as follows:

By Deposit Type:
- savings
- special savings
- demand/checking
- negotiable order of withdrawal (NOW)
- time deposits

By Deposit Account:
- single account
- joint account
- account "By", "In Trust For" (ITF) or "For the Account of" (FAO) another person
By Currency:
- philippine peso
- foreign currencies considered as part of BSP's international reserves

PDIC member-banks

Consist of institutions authorized by the Bangko Sentral ng Pilipinas (BSP) to perform banking functions in the Philippines:

- banks incorporated under Philippine laws, such as commercial banks, savings banks, mortgage banks, development banks, rural banks and cooperative banks and stock savings and loan associations

- domestic branches of foreign banks

Single Accounts

Single Accounts are individually-owned accounts or accounts held under one name, either as natural person or juridical entity

- Natural person refers to any individual person. Single proprietors are considered natural persons.

- Juridical entity refers to a corporation, partnership or cooperative, including registered association.

Joint Accounts

Joint Accounts are accounts held under more than one name.

- a joint account regardless of whether the conjunction "and", "or" or "and/or" is used shall be insured separately from single accounts.

- unless a different sharing is stipulated in the deposit documents, the insure amount up to the Maximum Deposit Insurance Coverage of P500,000 shall be divided equally between or among co-owners of a joint account.

- the total share of a co-owner in several  joint accounts may exceed P500,000 but will only be insured up to the Maximum Deposit Insurance Coverage of P500,000.

- joint accounts held in the names of a juridical entity and a natural person shall be presumed to belong solely to the juridical entity. 

"BY", "ITF" or "FAO" Accounts

- in a "By" account, Ana by Ben, Ana is the depositor.

- in an "In Trust For"(ITF) account, Ana In Trust For Ben, Ben is the depositor. 

- in a "For the Account of" (FAO) account, Ana For the Account of Ben, Ben is the depositor.

- in an account with combined Joint and FAO/ITF, Ana and/or David In Trust For Ben, Ben is the depositor. 
Understanding Deposit Insurance
Understanding Deposit Insurance
Deposit Insurance eCalculator

To help depositors estimate their insured deposits, visit the Deposit Insurance eCalculator at: https://www.pdic.gov.ph/eCalculator.html
For the purposes of computing the insured deposits, all obligations or loans of the depositor with the closed bank, as of bank closure, shall be deducted from the depositor's total deposits with the said bank. (PDIC Regulatory Issuance No. 2011-04)
What are NOT covered by PDIC deposit insurance? 

The following, whether denominated, documented, recorded or booked as deposit by the bank, are excluded from PDIC deposit insurance (Section 4 (f) of the PDIC Charter)

1. investment products such as bonds and securities, trust accounts and other similar instruments.

2. deposit accounts or transactions that: 

- are unfunded, fictitious or fraudulent

- constitute and/or emanate from unsafe and unsound banking practice/s as determined by the PDIC, in consulation with the BSP, after due notice and hearing and publication of PDIC's cease and desist order against such deposit accounts/transactions

- are determined to be proceeds of an unlawful activity as defined in the Anti-Money Laundering Act (Republic Act 9160, as amended)

Unsound Banking Practices

Under PDIC Regulatory Issuance No. 2011-01, the following are examples of banking practices that may be considered unsafe and/or unsound: 

1. Solicitation and acceptance of deposits outside bank premises, including branches without BSP authority

2. Non-compliance with minimum identification and documentation requirements from depositors in the opening of deposit accounts (Anti-Money Laundering Law)

3. Allowing depositors to deposit, withdraw and/or transfer funds without proper documentation such as duly accomplished deposit or withdrawal forms.

4. Granting high interest rates, when bank has: (i) negative unimpaired capital, and (ii) either a liquid assets-to-deposits ratio of less than 10% or an operating loss.

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