What is the Philippine Deposit Insurance
Corporation (PDIC)?
PDIC is a government instrumentality created in
1963 by virtue of Republic Act 3591 to insure the
deposits of all banks which are entitled to the
benefits of insurance. The latest amendments to
RA 3591 are contained in RA 9576 signed into
law on April 29, 2009. RA 9576 increased the
maximum deposit insurance coverage to
P500,000.00. The new law also includes
important provisions to ensure that the PDIC
remains financially and institutionally strong to
fulfill its mandate under its Charter.
The PDIC now has the authority to determine
which deposit products are covered by insurance.
The PDIC is also authorized to conduct
independent special examination of banks and
may inquire into or examine deposit accounts of
ailing banks in the event there is a finding of
unsafe and unsound banking practices.
Part of the financial strengthening measures for
the PDIC, on the other hand, include exemption
from taxes and the authority to issue sovereign
bonds, debentures and other debt issuances.
The PDIC is an attached agency of the
Department of Finance.
What is PDIC’s overall mandate?
PDIC exists to provide permanent and continuing
deposit insurance coverage for the depositing
public to help promote public confidence and
stability in the economy. It ensures prompt
payment of insured deposits, exercises
complementary supervision of banks, adopts
responsive resolution methods, and applies
efficient management of receivership and
liquidation functions.
What are the functions of PDIC?
 Deposit Insurer
 Co-regulator of Banks
 Receiver and Liquidator of Closed Banks
What is PDIC’s maximum deposit insurance
coverage?
Effective June 1, 2009, the maximum deposit
insurance coverage is P500,000 per depositor. All
deposit accounts by a depositor in a closed bank
maintained in the same right and capacity shall
be added together.
Under R.A. No. 9576, the PDIC may propose to
adjust the MDIC, subject to the approval of the
President of the Philippines, in case of a condition
that threatens the monetary and financial
stability of the banking system that may have
systemic consequences.
What is an insured deposit?
The term ‘insured deposit’ means the amount
due to any bona fide depositor for legitimate
deposits in an insured bank net of any obligation
of the depositor to the insured bank as of date of
closure, but not to exceed P500,000.00.
A joint account shall be insured separately from
any individually-owned deposit account.
R.A. No. 9576 stipulates that PDIC will not pay
deposit insurance for the following accounts or
transactions:
1. Investment products such as bonds,
securities and trust accounts;
2. Deposit accounts which are unfunded,
fictitious or fraudulent;
3. Deposit products constituting or
emanating from unsafe and unsound
banking practices;
4. Deposits that are determined to be
proceeds of an unlawful activity as defined
under the Anti-Money Laundering Law.
Are all banks members of PDIC?
Membership of banks to PDIC is mandatory;
hence, all operating banks are members of PDIC.
What types of deposits are insured by PDIC?
Except for the exclusions stipulated in RA 9576,
deposits of all commercial banks, savings and
mortgage banks, rural banks, private
development banks, cooperative banks, savings
and loan associations, as well as branches and
agencies in the Philippines of foreign banks and
all other corporations authorized to perform
banking functions in the Philippines, are insured
with PDIC. As for Philippine banks with branches
outside the country, RA 9576 stipulates that
subject to the approval of the Board of Directors,
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any insured bank with branch outside the
Philippines may elect to include for insurance its
deposit obligations payable at such branch.
Foreign currency deposits are also insured by
PDIC pursuant to RA 6426 (“An act instituting a
foreign currency deposit system in the
Philippines, and for other purposes”) and Central
Bank (CB) Circular No. 1389. Depositors may
receive payment in the same currency in which
the insured deposit is denominated.
Exclusions from deposit insurance coverage as
stipulated in R.A. No. 9576:
1. Investment products such as bonds,
securities and trust accounts;
2. Deposit accounts which are unfunded,
fictitious or fraudulent;
3. Deposit products constituting or
emanating from unsafe and unsound
banking practices;
4. Deposits that are determined to be
proceeds of an unlawful activity as defined
under the Anti-Money Laundering Law.
Are deposits maintained in branches and
subsidiaries of foreign banks operating in
the Philippines insured by the PDIC?
Yes, the PDIC Charter provides that the deposits
in branches and subsidiaries of foreign banks
licensed by the Bangko Sentral ng Pilipinas (BSP)
to perform banking functions in the Philippines
are insured by the PDIC.
Are deposits maintained in Philippine banks
with branches outside the Philippines
insured by the PDIC?
The PDIC Charter provides that a Philippine bank
may elect to insure with the PDIC its deposits in
branches outside the Philippines. As of 31
December 2012, no Philippine bank has elected
to insure deposits in their foreign branches with
PDIC.
To verify if your deposits in a branch of a
Philippine bank outside the Philippines are
covered by deposit insurance in the host foreign
country, please inquire with the account officer of
your branch.
What specific risks to a bank does PDIC
cover?
PDIC covers only the risk of a bank closure
ordered by the Monetary Board. Thus, bank
losses due to theft, fire, closure by reason of
strike or existence of public disorder, revolution
or civil war, are not covered by PDIC.
Shall the depositor pay any insurance
premium to PDIC?
No. Insurance premium is paid by the banks, not
by the depositors. The bank is assessed 1/5 of
1% per annum of the assessment base of the
bank.
How is insurance coverage determined?
In determining the insured amount, the
outstanding balance of each account is adjusted,
such that interests are updated, withholding
taxes are deducted, accounts maintained by a
depositor in the same right and capacity are
added together; and whenever applicable, unpaid
loans and other obligations of the depositor are
deducted; and in no case shall insured deposit
exceed P500,000.
R.A. No. 9576 stipulates that PDIC will not pay
deposit insurance for the following accounts or
transactions:
1. Investment products such as bonds,
securities and trust accounts;
2. Deposit accounts which are unfunded,
fictitious or fraudulent;
3. Deposit products constituting or
emanating from unsafe and unsound
banking practices;
4. Deposits that are determined to be
proceeds of an unlawful activity as defined
under the Anti-Money Laundering Law.
Can PDIC insurance coverage be increased
by having several accounts in the same
name in an insured bank?
No. Deposit insurance coverage is not determined
on a per-account basis. The type of account
(whether checking, savings, time or other form of
deposit) has no bearing on the amount of
insurance coverage.
If I have deposits in several different
insured banks, will my deposits be added
together for insurance purposes?
No. Deposits in different banking institutions are
insured separately. However, if a bank has one or
more branches, the main office and all branch
offices are considered as one bank. Thus, if you
have deposits at the main office and at one or
more branch offices of the same bank, the
deposits are added together when determining
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deposit insurance coverage, the total of which
shall not exceed P500,000.
Is there a need for a depositor to file his
claim for insured deposit with PDIC?
Yes. Depositors will be advised through the
national and/or local media and posters at the
premises of the closed insured bank and other
public places within the locality on the schedule
of distribution of claim forms by PDIC, receiving
of claim forms by PDIC, and the prescriptive date
of filing claims by the depositors.
When should the depositor of a closed
insured bank file his claim with PDIC?
The depositor of the closed insured bank has 24
months from date of bank takeover to file his
deposit insurance claim.
What happens when the depositor of a
closed bank fails to file his claim within the
24-month period?
All rights of the depositor with respect to the
insured deposit shall no longer be honored. But
he may still make a claim against the assets of
the closed bank.
How long does it take PDIC to settle a claim
for insured deposit?
PDIC aims to pay valid claims as soon as
possible. Prior to payout, claims are examined
thoroughly. This is to protect the Deposit
Insurance Fund (DIF) which is the source of
insurance payments. Sometimes, depositors
mistakenly assume that the payouts are sourced
from their deposits. This is not the case. The
payouts are from PDIC’s own funds.
The claim for insured deposit should be settled
within six (6) months from the date of filing
provided all requirements are met but the claim
must be filed within twenty-four (24) months
after bank takeover. The six-month period shall
not apply if the documents of the claimant are
incomplete or if the validity of the claim requires
the resolution of issues of facts and law by
another office, body or agency, independently or
in coordination with PDIC.
What processes are involved before PDIC
starts servicing claims?
Deposit records are subjected to an examination
prior to the start of servicing/settlement of
claims. Claims are evaluated and processed
according to PDIC's standard procedures.
How long does the pre-settlement
examination take?
The length of time needed for the pre-settlement
examination of deposit liabilities of a closed
insured bank largely depends on the
completeness and accuracy of records turned
over by the Bank to PDIC and the number of
deposit accounts to be examined.
If the deposit account in a closed bank is
more than P500,000.00, what happens to
the excess of the maximum amount of
insured deposit?
If the closed bank is not rehabilitated or taken
over by another bank, amount in excess of the
P500,000 coverage can still be claimed upon the
final liquidation of the remaining assets of the
closed bank.
The claim may be filed with the Liquidator of the
closed bank but payment of the said claim will
depend on the bank's available assets to settle its
preferred claims (Government taxes, labor
claims, secured credits and trust funds) and
approval of the Liquidation Court. The schedule
of payment beyond the P500,000.00 maximum
insurance shall be based on priorities set by law.
Philippine Deposit Insurance System at a
Glance
The Philippine Deposit Insurance Corporation
(PDIC) is a government instrumentality created
on June 22, 1963 by Republic Act 3591 entitled,
An Act Establishing the Philippine Deposit
Insurance Corporation (PDIC), Defining Its Powers
and Duties and for Other Purposes (the "PDIC
Charter"). PDIC was created to "promote and
safeguard the interests of the depositing public
by way of providing permanent and continuing
insurance coverage on all insured deposits." The
PDIC also aims to strengthen the mandatory
deposit insurance coverage system to generate,
preserve, and maintain faith and confidence in
the country's banking system, and protect it from
illegal schemes and machinations.
Mandate
Consistent with its public policy objectives, the
PDIC has the following mandates:
i. As State Deposit Insurer. The Corporation
provides deposit insurance of up to
Php500,000, the maximum deposit
insurance coverage. Member-banks are
assessed annually at a flat rate of 1/5 of
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 1% of their total deposit liabilities. The
assessments are collected from member-
banks semi-annually and form part of
PDIC's Deposit Insurance Fund (DIF).
ii. As Co-Regulator of banks. PDIC works
closely with the Bangko Sentral ng
Pilipinas (BSP) in strengthening the
banking system. PDIC is authorized to
issue regulations to implement its Charter,
conduct bank examinations and
investigations to determine banks'
financial health and their adherence to
rules and regulations on banking and
deposit insurance, and extend financial
assistance to distressed banks.
iii. As Statutory Receiver. PDIC is the
statutory receiver and liquidator of all
closed banks. Upon order of the Monetary
Board of the BSP, PDIC takes over closed
banks, administers their assets, records
and affairs; and preserves and disposes
these assets for the benefit of the closed
banks' creditors. If the Monetary Board
orders the liquidation of a bank that has
been placed under receivership, creditors'
claims against the bank are settled
according to the preference and
PDIC insures valid deposits in domestic offices of its
member-banks, as follows:
• By Deposit Type:
 Savings
 Special Savings
 Demand/Checking
 Certificate of 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 international reserves at the Bangko
Sentral ng Pilipinas
*Under PDIC Regulatory Issuance No. 2011-01,
the PDIC shall deem a deposit-related practice,
activity, transaction, or omission to be an unsafe
and/or unsound banking practice when it has
resulted or may result in:
concurrence of credits as provided by the
Civil Code of the Philippines.
Membership
Membership with PDIC is mandatory for all banks
licensed by the BSP to operate as such in the
Philippines.
• Banks incorporated under Philippine laws,
such as commercial banks, development
banks, savings and loan associations, and
rural or cooperative banks
• Domestic branches of foreign banks
Scope of Deposit Insurance Protection
As a rule, PDIC provides deposit insurance of up
to Php500,000 per depositor per bank. It covers
all types of bank deposits in member-banks
denominated in both local and foreign currencies.
As of December 31, 2011, total deposits in the
banking system amounted to Php5.4 trillion
consisting of 43.7 million deposit accounts. 97.2%
of the deposit accounts are fully covered by
deposit insurance.
The following bank products are not
covered by deposit insurance:
i. Certain bank products such as trust
and investment products, bonds and
securities, and similar instruments
ii. Deposit accounts or transactions
that:
a. Are unfunded, or fictitious or
fraudulent
b. Emanated from or
constituting unsafe and
unsound banking practice/s*
as determined by the PDIC in
consultation with the BSP,
after due notice and hearing
and publication of PDIC's
directive to cease and desist
against such deposit
accounts/transactions
c. Are determined to be
proceeds of unlawful activity
as defined in the Anti-Money
Laundering Act (Republic Act
9160, as amended)
1. Unreasonable delay in the processing or
determination of the validity of deposit
claims in the event of bank closure; or
2. Material loss or damage or abnormal risk
to the bank's depositors, creditors,
shareholders, or to the PDIC; or
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 3. Material loss or damage or abnormal risk
or danger to the safety, stability, liquidity,
or solvency of the bank.

The following activities may be considered unsafe

and/or unsound deposit-related practices:

1. Deposit-related
practice/activity/transaction without the
approval or adequate controls required
under existing laws, rules and regulations;
2. Failure to keep bank records within bank
premises;

3. Grant of high interest rates, when bank

has: a) negative unimpaired capital or b)
liquid assets to deposit ratio of less than
10% or an operating loss;

4. Non-compliance with PDIC regulations; or

5. Other deposit related practices, activities,

and transactions that may be identified
through appropriate issuances.