PDIC backs bill to expand deposit insurance powers

The Philippine Deposit Insurance Corp. said it supports Senate Bill No. 1667, recently filed by Senate President Vicente C. Sotto III, a measure that would amend Republic Act No. 3591, or the PDIC Charter, to strengthen the state deposit insurer’s capacity to protect depositors and promote financial stability.

“The PDIC welcomes the support of the Senate President in championing legislative reforms that would strengthen the country’s financial safety net and better protect the depositing public,” said PDIC President and CEO Roberto B. Tan.

PDIC said the proposal comes with a key change already in place: the higher maximum deposit insurance coverage (MDIC) of PHP 1 million per depositor per bank, which took effect March 15, 2025.

With that MDIC increase now effective, PDIC said the proposed amendments would serve as the legal backbone for a more responsive, resilient and future-ready deposit insurance system, including the ability to respond “swiftly and decisively during crises.”

PDIC said the bill carries a six-point legislative agenda: expanded coverage to non-bank financial institutions (NBFIs) and cooperatives, higher insurance protection for socially and economically critical accounts, faster settlement of deposit insurance claims, exclusive use of the Deposit Insurance Fund (DIF), a crisis-driven temporary blanket guarantee, and enhanced liquidation of closed banks alongside institutional strengthening.

Under “expanded coverage beyond banks,” PDIC said it is seeking to extend deposit insurance to deposits offered by NBFIs supervised by the Bangko Sentral ng Pilipinas and cooperatives supervised by the Cooperative Development Authority.

PDIC said the expansion is intended to close coverage gaps and ensure more savers have deposit insurance protection.

On “higher protection for accounts with high social and economic value,” PDIC said the reforms would introduce authority to adopt differential coverage, allowing insurance limits above the MDIC for accounts such as retirement savings, payroll accounts and settlement accounts.

PDIC said this approach is intended to minimize disruption in communities and the payment system if a bank closes.

On “faster settlement of deposit insurance claims,” PDIC said the amendments would mandate prompt payment of deposit insurance so depositors can access funds immediately when banks fail.

As part of that, PDIC said banks would be required to maintain comprehensive and accurate electronic deposit records.

PDIC also said it would be exempted from Bank Secrecy Laws to enable swift verification and payout.

PDIC added that to prevent depositors from being deprived access to their deposits in contested bank closures, the proposal would allow only a Supreme Court-issued temporary restraining order or injunction to prohibit payment of deposit insurance claims.

On “exclusive use of the Deposit Insurance Fund,” PDIC said the bill would ringfence the DIF for payment of deposit insurance claims and the grant of financial assistance to distressed banks.

PDIC said this is meant to preserve the DIF and ensure it is deployed exclusively for the purpose for which it was established.

On a “crisis-driven temporary blanket guarantee,” PDIC said it is seeking authority to implement temporary full deposit insurance coverage, triggered upon determination by the Monetary Board of the Bangko Sentral ng Pilipinas that a systemic crisis exists and threatens financial stability.

PDIC said the measure is intended to sustain public confidence and deter destabilizing bank runs during crises.

On “enhanced liquidation and institutional strengthening,” PDIC said the reforms would streamline liquidation processes for closed banks to enable faster recovery for closed bank creditors.

PDIC said the institutional strengthening measures would bolster the corporation’s governance, operational capacity and workforce so it can execute an expanded mandate.

“These proposed measures are critical to strengthening depositor protection and reinforcing public confidence in the stability of the financial system. These will ensure our deposit insurance system is responsive to changing times and the Deposit Insurer has the much-needed tools and authorities that can be deployed during periods of crisis,” Tan said.

PDIC said it is committed to closely collaborating with legislators, financial regulators and industry stakeholders to push for the bill’s passage.

PDIC said once enacted, the six-point agenda is expected to enhance depositor confidence, strengthen the banking system and help promote overall financial system stability.

 

Senator warns against treating PDIC reserves as revenue

Sen. Loren Legarda raised concerns over the remittance of PHP 107.23 billion in PDIC funds to the National Treasury, warning that funds held in trust to protect depositors should not be treated as ordinary government revenues.

Legarda said the remittance was made under a special provision in the 2024 General Appropriations Act that she said was later declared unconstitutional by the Supreme Court.

She said the transfer was taken from PDIC’s Deposit Insurance Fund, which she described as built from bank premiums and intended solely to insure deposits and respond to bank failures, not to finance general government spending.

“PDIC funds exist to insure deposits and protect ordinary Filipinos when banks fail. They are not surplus funds and should not be treated as general revenues, but reserves meant to ensure that depositors do not lose their savings,” Legarda said.

Legarda warned that diverting PDIC reserves to the National Treasury—even for development purposes—risks undermining public confidence in the deposit insurance system and weakening the financial safety net relied upon by small depositors, retirees, overseas Filipino workers and micro-entrepreneurs.

Legarda pointed to what she called lessons from the Supreme Court ruling on PhilHealth, saying the unconstitutional transfer of PHP 60 billion in health insurance funds resulted in fewer resources for health care services and eroded public trust in social protection institutions.

“Whether it is health insurance or deposit insurance, funds collected and reserved to protect people in times of crisis must be respected as a trust. When these safeguards are weakened, the cost is ultimately borne by ordinary Filipinos,” she said.

Legarda urged the government to stop treating social protection reserves as general-purpose funds and called on Congress to review and correct policies that weaken trust funds essential to confidence in the financial system.

“Our responsibility is not just to manage public finances, but to protect funds that people rely on in moments of crisis. These reserves exist to provide security when it is most needed, and they must be preserved for that purpose,” she said.