Bank Deposits - Your Partner in Progress

·6 min read

WITH the theme "Deposito sa Bangko, Katuwang sa Pag-asenso", Philippine Deposit Insurance Corporation (PDIC) leads the nationwide observance of the 20th Depositor Protection and Awareness Week from June 16 to 22, 2022.



Saving in Banks – Gateway to Financial Security

The road to financial security and a bright future starts with saving. The habit of setting aside a portion of one’s earnings gives them the foundations for meeting future needs and many of the things they want in life.

By saving regularly, we can have funds to:

  1. Meet our needs during times when health, economic, and other reasons prevent us from making a living;

  2. Invest in financial assets or even a business in preparation for retirement and other financial goals;

  3. Insure ourselves and our assets against sickness or death and damages; and

  4. Achieve our dreams in life i.e., travel, home, education, etc.

  5. More importantly, the habit of saving money can help us achieve peace of mind knowing that we have saved something for rainy or even stormy days. This is financial security.



Why Banks?

Safe and convenient transactions

Many banks today provide secure and easy-to-use online platforms. From web browsers to mobile apps, it is now very easy to receive money and send payments anytime, anywhere. A bank account also makes it convenient and safe to invest in financial assets. And for very large transactions, such as purchasing a property or tuition fee payments, bank checks provide a safe and discreet way to transfer funds.

Travel and other requirements

Many countries require a bank statement to process visa applications. Utility and financial service companies often ask for it, too, as part of their account application evaluation.



Protection for Your Hard-earned Money

Lastly, money deposited in banks is safe and secure. From security personnel to solid steel vaults, you can count on banks to protect their money.



PDIC—Your Confidence to Save in Banks

The banking industry’s main foundation is trust. People deposit their hard-earned money in banks when they feel confident about the security of their deposits. Since 1963, the Philippine Deposit Insurance Corporation has been helping Filipinos feel confident about saving their hard-earned money in banks.

Through its deposit insurance coverage, the Corporation provides a financial safety net that helps encourage people to develop this important financial habit. From an initial maximum deposit insurance coverage of only P10,000 in 1963, the PDIC now covers deposits up to P500,000 per depositor per bank.



Through the Years: Stronger Depositor Protection

Increasing the MDIC throughout the years is just one of many depositor protection-related milestones of the PDIC. Not one to rest on its laurels, the Corporation pursues continual improvement to better protect the depositing public. Guided by the International Association of Deposit Insurers (IADI), a Switzerland-based non-profit organization established in 2002 to promote international cooperation and guidance in the field of deposit insurance, and the IADI core principles for effective deposit insurance systems, below are some of the state deposit insurer’s major wins for the depositing public in the last six decades of implementing the Philippine deposit insurance system.



Deposit Insurance Fund

Deposit insurers must have the funds and funding mechanisms necessary for prompt reimbursement of depositors’ claims. To this extent, the PDIC has prudently managed the deposit insurance fund (DIF) from which it pays deposit insurance claims. From only P5 million on its establishment in 1963, the DIF stood at P243 billion by end of 2021. The amount covers 7.68 percent of the country’s estimated insured deposits and is significantly higher than its minimum target for fund adequacy of 5.5 percent.



Depositor Reimbursement

To promote banking and financial system stability, deposit insurers must be able to reimburse depositors’ insured funds promptly. To settle deposit insurance claims as quickly as possible, the PDIC took several steps to expedite the payment of insured deposits.

  1. Outright payment of deposit insurance claims that do not require filing via postal money orders (PMO) that are sent directly to depositors’ registered addresses.

  2. Increased the limit for waived filing of deposit insurance claims from P5,000 in 2010 to P100,000 at present.

  3. Deposit insurance payment options have been expanded by way of collaborations with financial institutions. Deposit insurance is now paid through a variety of convenient options such as checks, cash-over-the-counter, debit cards, direct credit to bank or e-money issuer accounts, and outgoing telegraphic transfers (OTT).



Public Awareness

Ongoing public information on the benefits and limitations of deposit insurance is important to protect depositors and promote financial stability. The PDIC ensures that the general public is constantly reminded about its deposit insurance coverage by, among others:

  1. Requiring member banks to advertise the PDIC’s deposit insurance protection in their branches, automated teller machines, deposit documents, website, and advertisements;

  2. Leading the annual observance of the Depositor Protection and Awareness Week (DPAW) in June;

  3. Conducting financial literacy sessions via its flagship program, “Be A Wise Saver” (BAWS); and

  4. Attending to queries, requests, and complaints (QRCs) from clients and other stakeholders at the PDIC’s public assistance center.





Relationships with Other Financial Safety-net Participants

Depositor protection and promoting financial system stability are not just limited to deposit insurance. Both require contributions from other financial safety-net players to cover as many bases as possible. To this extent, the PDIC continues to work closely with financial regulators through formal and comprehensive coordination of activities and sharing of information. These include:

  1. Founding of the Financial Sector Forum (FSF) together with the Bangko Sentral ng Pilipinas (BSP), Insurance Commission (IC), and Securities and Exchange Commission (SEC) in 2004. The FSF provides an institutionalized framework for the coordination of members’ supervisory and regulatory activities in fulfillment of their mandates.

  2. Instituting the Financial Stability Coordination Council (FSCC) in 2014 together with FSF members and the Department of Finance. The interagency council aims to identify, manage, and mitigate systemic risks in the country’s financial system.

  3. Initiation of a multi-agency project to streamline the processing of merger-consolidation-acquisition (MCA) applications of banks. A Memorandum of Agreement (MOA) was signed by the PDIC together with the BSP, SEC, Cooperative Development Authority, and the Philippine Competition Commission in 2021 to formalize the project in support of the Philippines’ ease of doing business law.

  4. Active participation in the FSF’s Financial Technology (FinTech) Committee, the committee that oversees the coordinated formulation and implementation of cybersecurity-related policies and guidelines for all Philippine financial institutions engaged in fintech activities.



Holding Parties-at-Fault in Bank Failures Accountable

The PDIC ensures individuals responsible for bank failures are brought to justice. When the state deposit insurer finds evidence of wrongdoings in closed banks, it files the appropriate cases in court against former employees, officers, and directors who commit fraudulent, irregular, and anomalous acts that are detrimental to the interest of depositors and the Deposit Insurance Fund. This is to send a strong message to support governance in the banking system.



Your Partner on the Road to Progress



Regardless of one’s financial goals, they all start with saving money in banks. This important foundational habit can help one easily develop other beneficial habits that can accelerate their progress towards financial security and eventually, fulfill their dreams. Kaya tunay ngang ang deposito sa bangko ay katuwang sa pag-asenso.

And with the PDIC’s deposit insurance coverage and commitment to the continuous strengthening of depositor protection, one can have peace of mind knowing their hard-earned money in the bank is safe and secure. Dahil sa PDIC, ang bank deposit mo, protektado!

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