Senate approves new PDIC charter

MANILA, Philippines - The Senate unanimously approved Monday the amended Philippine Deposit Insurance Corporation (PDIC) charter on third and final reading. An article on the Senate website said the bill, certified as urgent due to the global financial meltdown, raises maximum insurance from P250,000 to P500,000. "These are extremely confusing times where panic can only make matters worse. Maintaining, if not restoring confidence in the banking system should be our priority. A stable and dependable deposit insurance system shores up depositor confidence. It also guarantees the sufficiency of credit to finance vital economic activities in the country," Senate finance committee chairman Edgardo Angara said. He said the passage of the amended PDIC charter will help regain and further increase public confidence to the local banking system amidst the global financial crisis. Angara said regaining public confidence in the local banking system can be done by instituting protective or remedial measures to ensure that the Philippine financial market is resilient enough to weather the crisis. Financial reform in the PDIC is very timely since it aims to safeguard the interest of the depositing public, he added. At the proposed level of Maximum Deposit Insurance Coverage (MDIC), about 97.23% of the more than 31 million deposit accounts in the country will enjoy the benefits of deposit insurance cover. "The increase will encourage depositors to keep their money in the banks, knowing that their savings would be safe, intact, and readily available on the faith and credit of the government," Angara said. Other countries have also been alleviating the effects of the financial turmoil in their respective banking systems, he noted. In Europe, the governments of Sweden, Spain, Belgium and The Netherlands have agreed to raise deposit guarantees from €20,000.00 to €100,000.00. Governments of Ireland, Germany, France, Denmark and Austria have provided blanket guarantee of bank deposits. The United Kingdom has likewise increased the guarantee to its depositors from £35,000.00 to £50,000.00. In the US, The Federal Deposit Insurance Corporation (FDIC) has increased its deposit insurance coverage from $100,000 to US$250,000 effective until 2009. In Asia, neighboring countries such as Hong Kong, Malaysia and Singapore have announced sovereign guarantee of all local and foreign currency deposits until the end of 2010. Indonesia has recently extended its coverage from the equivalent of US$9,000 to US$182,000, while Kazakhstan's coverage was adjusted from the equivalent of US$6,000 to US$42,000. "We are facing extraordinary challenges. Internationally, governments have responded by prioritizing measures to restore stability to their respective economies. While nobody can accurately predict what the longer-term consequences of this crisis will be, the emerging truth requires us to prepare now for the inevitable impact to the Philippines," Angara said. "The passage of the amended PDIC charter in the Senate is one bold move to place the country in a better position to be able to absorb shock from this credit crisis and financial turbulence," he added.- GMANews.TV