Bigger role set for PDIC
The Philippine Deposit Insurance Corp. (PDIC) is set for a bigger mandate following the amendment of its charter aimed at boosting the country’s deposit insurance system.
The PDIC charter has been effectively amended through Republic Act 11840 after the bill lapsed into law and took effect yesterday.
The changes enhanced the state deposit insurer’s capacity to further strengthen and expand the financial safety net for depositors and creditors of Philippine banks.
PDIC president and CEO Roberto Tan welcomed the new law, saying it reinforces the role of deposit insurance as a financial safety net that helps sustain public confidence in the banking system.
“Deposit insurance is an important pillar of trust and confidence and it is most effective when it stands alongside other pillars of security to ensure a sound and stable financial system,” Tan said.
With the amendment, PDIC may now adjust the maximum deposit insurance coverage (MDIC) based on inflation and other relevant economic indicators without the need for legislation.
The MDIC is up for revision every three years and the PDIC board is authorized to increase it, if deemed necessary.
With the law, PDIC is now under the helm of the Bangko Sentral ng Pilipinas (BSP) instead of the Department of Finance.
Under the new structure, both the BSP and PDIC can optimize regulatory coordination efficiency.
The amended law now mandates the PDIC to provide insurance coverage to Islamic bank products or arrangements classified as deposits by the BSP. It also authorizes PDIC to establish a separate deposit insurance fund to cover these types of deposit products.
The PDIC now has the authority to sell closed bank assets to financial institution strategic transfer (FIST) corporations.
Under the FIST Act, these are companies created specifically to purchase the non-performing assets of financial institutions, including loans and real and other properties acquired, both comprising the biggest chunks of assets held by the PDIC as the statutory liquidator of closed banks.