Higher deposit insurance boosts savings, public confidence

Deposits in the Philippine banking system posted stronger growth a year after the maximum deposit insurance coverage was raised to PHP 1 million per depositor, per bank, according to the Philippine Deposit Insurance Corporation.

The higher coverage, which took effect March 15, 2025, is intended to give depositors greater protection against losses in the event of a bank closure while helping strengthen public confidence in keeping savings within the formal banking system.

For households and small businesses, stronger deposit protection can provide an added layer of financial security at a time when inflation and rising living costs can erode the real value of savings.

The PDIC reported the figures during “PDIC 101: Understanding Deposit Insurance,” held in partnership with the Philippine Information Agency at the PIA Auditorium on Aug. 5, 2026.

PDIC Vice President Jose G. Villaret Jr. of the Corporate Affairs Group said bank deposits grew by 9.8 percent as of end-March 2026 following the implementation of the higher maximum deposit insurance coverage, or MDIC, during the same period a year earlier.

The 9.8 percent increase was significantly higher than the 5.3 percent growth recorded in the same period in 2024, before the higher insurance ceiling took effect.

The strongest growth came from depositors with balances exceeding PHP 1 million.

Deposits in that segment increased by 10.3 percent, nearly double the 5.4 percent growth recorded before the MDIC adjustment.

Thrift and rural banks posted the most notable gains in large deposit balances, indicating stronger depositor confidence across different segments of the banking industry.

“The increase in deposit insurance coverage has reinforced public trust in our banking system and encouraged more people to keep their savings in banks,” Mr. Villaret said.

Deposit insurance plays a broader role in financial stability by assuring depositors that eligible savings are protected up to a prescribed limit if an insured bank fails.

That protection can help reduce the risk of panic withdrawals and support confidence in banks, particularly during periods of economic uncertainty or stress in the financial system.

The PDIC also said the Philippines’ deposit insurance coverage remains among the strongest in the Association of Southeast Asian Nations region.

Based on the ratio of deposit insurance coverage to 2025 gross domestic product per capita using World Bank data, the Philippines ranked among the top three ASEAN economies.

The country posted a ratio of 4.2, following Malaysia and Indonesia.

The PDIC said the comparison shows that the Philippine deposit insurance system remains aligned with regional and international standards.

The increase to PHP 1 million was the first adjustment in the MDIC in 16 years.

The higher ceiling was intended to keep depositor protection responsive to inflation, consistent with global best practices, and meaningful to the changing financial needs of depositors.

The adjustment also marked the first time the PDIC Board of Directors exercised its authority under the PDIC Charter to revise the maximum deposit insurance coverage.

That authority followed amendments to the deposit insurance law in July 2022.