PDIC levels up deposits exempted from filing claims to P10k

Philippine Deposit Insurance Corp. President Jose Nograles said on Sunday that the government-owned deposit insurer would no longer require small depositors of closed banks with accounts of P10,000 and below to file deposit insurance claims. PDIC has, in effect, doubled the coverage of the waiver for filing of deposit insurance claims to ensure the expeditious payment of insurance to small depositors of closed banks without the need to file claims. “PDIC reaffirms its commitment to protect small depositors and that is why our Board of Directors immediately approved the extension of waiver of the filing requirement to depositors with balances of P10,000 and below," Nograles said. Last year, PDIC implemented for the first time the waiver for depositors with balances of P5,000 and below. This level will still apply to banks closed before March 17. “PDIC continuously looks for ways to improve its public service delivery to the depositing public," Nograles said. Banco Filipino small depositors PDIC explained that the expansion of the coverage of waiver for the filing of insurance claim to P10,000 and below instead of the previous level of P5,000 and below, would increase to 63 percent of Banco Filipino depositors or over 100,000 depositors who would receive their deposit insurance directly through registered mail without need of filing claims. Last week, PDIC started mailing the first batch of insurance payments to Banco Filipino depositors with balances of P5,000 and below, with no outstanding loans from the bank and with complete addresses in the bank records. Payment was made by way of Postal Money Orders (PMOs) sent through registred mail directly to depositors. The PMOs can be encashed in more than 1,400 post offices and over 300 Land Bank of the Philippines branches nationwide. PDIC would start mailing insurance payments to Banco Filipino depositors with balances of between P5,001 to P10,000 in May, after the target completion of the payment for P5,000 and below. For accounts with balances above P10,000 up to P500,000, the target start of payout is 120 days after the takeover or in mid-July. PDIC coverage of bank deposits A total of 11 banks have been placed under the receivership of the PDIC by the Bangko Sentral ng Pilipinas (BSP) in the first quarter of the year. These include Rural Bank of Agno (Pangasinan) Inc., Banco Filipino Savings and Mortgage Bank, Growers Rural Bank Inc., Rural Bank of Manjuyod (Negros Oriental) Inc., GMA Rural Bank of Cavite, Inc., Rural Bank of Bingawan (Iloilo) Inc., Rural Bank of Mapandan (Pangasinan) Inc., Rural Bank of Norzagaray (Bulacan) Inc., Rural Bank of Zapote (Las Piñas City) Inc., Ibalon Rural Bank (Tabaco, Albay) Inc., and Rural Bank of Baler (Aurora) Inc. “This new level will also apply to succeeding bank closures," the PDIC chief stressed. Republic Act 9576 which amended the PDIC charter (RA 3591) increased the maximum deposit insurance coverage to P500,000 from P250,000 as large and established banks in the United States of America collapsed at the height of the financial crisis in 2008. However, the law also specified which bank deposits are not covered by deposit insurance and these included those coming from unsafe and unsound banking practices. Unsafe and unsound banking practices include activities that result in unaccounted, undocumented or unrecorded deposits; failure to keep bank records within the bank’s premises such as deposit documents like signature cards, depositor information files and deposit ledgers; and grant of high interest rates when the bank has negative unimpaired capital, a liquid assets-to-deposit ratio of less than 10 percent, or operating at a loss. An interest rate is considered high if it is 50 percent higher than the market median for the same type of banks. Other unsafe and unsound practices include solicitation and acceptance of bank deposits outside bank premises without the central bank’s authorization; non-compliance with identification and documentation requirements for depositors; recording deposits or withdrawals without supporting documents; offering and accepting high-interest deposits despite a cease and desist order by the central bank; allowing unauthorized bank personnel and non-bank personnel to handle deposit transactions; and allowing depositors to deposit, withdraw, and transfer funds without proper documentation. — MRT/VS, GMA News