PDIC to hike bank deposit protection

MANILA, Philippines — The Philippine Deposit Insurance Corp. (PDIC) is set to announce an expanded insurance coverage for bank deposits in the first half of 2025 to adjust for inflation and help lenders attract more funds, its top official said.

Speaking to reporters during the 2025 annual reception for the banking community, PDIC president and CEO Roberto Tan said his agency had completed a study that recommended hiking the current maximum deposit insurance coverage (MDIC) of P500,000 per depositor per bank.

The last time the MDIC increased was in 2009—doubling from P250,000 to P500,000—through an earlier amendment to the PDIC charter.

Tan said the PDIC board has yet to decide on the magnitude of the fresh hike in bank deposit protection.

“The board is now in discussion on the results of the study. The recommendation is to increase it (MDIC),” he said.

“Probably we’ll announce it within the first half. The implementation will have to be studied in detail—when do we start implementing it,” he added.

New law not needed

Under its amended charter that lapsed into law in 2022, PDIC as the agency mandated to protect bank deposits can adjust the MDIC based on inflation and other relevant economic indicators without the need for a new law.

The latest amendment to the charter, however, kept the MDIC at P500,000 while giving the PDIC board the power to adjust the amount.

The law says the MDIC may be adjusted “in case a condition occurs that threatens the monetary and financial stability of the banking system that may have systemic consequences.” Any change of the MDIC must have the PDIC board’s unanimous vote.

Also, the MDIC is up for revisiting every three years and the PDIC board of directors is authorized to increase it, if necessary, with the approval of the President.

In the same interview, Tan said the PDIC is working with the Bangko Sentral ng Pilipinas (BSP) in formulating measures that would complement the bigger insurance coverage, particularly policies that would deter banks from making riskier investment moves.

“Of course, we’re closely coordinating with the Bangko Sentral on the policy umbrella for that. That increases the leeway of banks to entice more deposits,” he said.

BSP Governor Eli Remolona Jr. earlier said that beefing up the protection for bank deposits would unlikely create a moral hazard, as he stressed the need to make the local deposit insurance system ready for systemic risks.

Jose Teodoro Limcaoco, president of the Bankers Association of the Philippines and Ayala-led Bank of the Philippine Islands, believes that it’s about time to expand the MDIC.

“I think you have to calibrate your deposit coverage. It must grow with inflation as well, right? Because the value of P500,000 [MDIC] whenever it was first set is clearly much lower than what P500,000 is today,” Limcaoco said in a separate interview.

(2025/01/13-05:30)