PDIC risk-based premiums aim to reward safer banks

QUEZON CITY — The Philippine Deposit Insurance Corporation (PDIC) has introduced its proposed Risk-Based Assessment System, or RBAS, which would align banks’ deposit insurance premium rates with their individual risk profiles.

The proposed reform is designed to strengthen the country’s deposit insurance framework by requiring banks to contribute to the Deposit Insurance Fund based more closely on the risks they pose rather than applying the same assessment rate to all banks.

PDIC presented the initiative to members of the media during “PDIC 101: Understanding Deposit Insurance,” a press conference held in partnership with the Philippine Information Agency on Aug. 5 at the PIA office in Quezon City.

PDIC General Counsel Maria Antonette I. Brillantes-Bolivar, who heads the agency’s RBAS working group, said the reform would promote stronger risk governance among banks while maintaining deposit insurance protection of up to PHP 1 million per depositor, per bank.

The PHP 1 million maximum deposit insurance coverage, which was increased from PHP 500,000, took effect March 15, 2025.

Under the current system, all banks pay a flat annual assessment rate equivalent to 0.2% of their total deposit liabilities.

The proposed RBAS would instead set assessment rates based on each bank’s overall risk profile, considering factors such as capital adequacy, liquidity, asset quality, governance, business model, and supervisory assessments adopted by the Bangko Sentral ng Pilipinas (BSP).

“The RBAS promotes fairness by ensuring that assessment rates better reflect a bank’s level of risk. It also encourages banks to strengthen governance, maintain adequate capital, and adopt sound risk management practices that contribute to a safer and more resilient banking system,” Brillantes-Bolivar said.

PDIC is developing the RBAS with advisory services from the World Bank Group and in consultation with the BSP and various banking associations.

Under the framework, financial and supervisory indicators will be combined to generate a composite risk score that will determine each bank’s assessment rate.

Banks with stronger risk profiles may qualify for lower assessment rates, giving financial institutions an added incentive to improve governance, capitalization, and risk management.

The framework is also aligned with the International Association of Deposit Insurers’ Core Principles for Effective Deposit Insurance Systems, which recognize differential or risk-based premium systems as part of effective deposit insurance frameworks.

To ease the transition, PDIC will conduct a one-year shadow run before the planned full implementation of the RBAS by 2028.

During the shadow run, banks will continue paying the existing flat assessment rate while receiving estimates of the premiums they would pay under the risk-based system.

The exercise will allow PDIC to test and refine the framework before the new assessment system takes full effect.

PDIC said all bank-specific assessments, simulated scores, and risk ratings generated under the framework will remain strictly confidential.

The proposed system also provides mechanisms for clarification, review, and periodic recalibration to keep its methodology responsive to changes in banking industry conditions.

As a co-regulator of banks alongside the BSP, PDIC said the RBAS would reinforce its financial stability and depositor protection mandate by giving banks stronger incentives to adopt prudent risk management practices.

Created in 1963 under Republic Act No. 3591, PDIC is the government deposit insurer and an attached agency of the BSP tasked with protecting depositors and helping maintain stability in the financial system.