Amid soaring inflation, Makati City Rep. Luis Campos Jr. foresees an increase of at least 50 percent (or P250,000) in the maximum deposit insurance coverage (MDIC) per depositor per bank within the next few months.
Campos said he is counting on the state-run Philippine Deposit Insurance Corp. (PDIC) “to raise the MDIC from the current amount of P500,000 to a higher sum of between P750,000 to P1 million per depositor per bank soon after the applicable bill is signed into law.”
The bill that grants the PDIC the power to bump up the MDIC is now awaiting President Rodrigo Duterte’s signature, according to Campos, a member of the House committee on banks and financial intermediaries.
The House and the Senate previously ratified the conference committee report on the bill.
Under the bill, the PDIC’s governing board “may increase the amount of the MDIC to an amount indexed to inflation or in consideration of other economic indicators as may be deemed appropriate.”
The measure also empowers the PDIC to review the amount of the MDIC every three years and enlarge it as may be warranted.
“The PDIC has no choice but to increase the MDIC because spiraling inflation is eroding at a faster rate the value of depositor protection afforded by the prevailing P500,000 ceiling,” Campos said.
The country’s inflation accelerated to a three-year high of 4.9 percent in April due to sustained price increases and lingering food supply issues. Economists see inflation surging to as high as 5.7 percent by June.
In House Bill 5812, Campos had originally proposed to double to P1 million the 13-year-old MDIC of P500,000 per depositor per bank.
However, instead of increasing the MDIC, as it did it in the past, Congress this time decided to give the PDIC the power to raise the ceiling.
Campos expressed confidence that the anticipated increase in the MDIC would further reinforce public confidence in the banking system and encourage even more Filipinos to save.
The Philippine banking system held P16.2 trillion in total deposits as of Dec. 31, 2021.
The deposits are spread over 87.1 million bank accounts owned by 81.7 million depositors, according to the Bangko Sentral ng Pilipinas (BSP).
Over the last five years, tens of thousands of depositors have been affected by the collapse or closure of 47 banks, including seven banks shut this year.
The MDIC was initially fixed at P10,000 in 1963, and then increased to:
- P15,000 in 1978;
- P40,000 in 1984;
- P100,000 in 1992;
- P250,000 in 2004; and
- P500,000 in 2009.
Banks pay for the compulsory insurance premiums that guarantee the MDIC.