PDIC, World Bank collaborate on risk-based deposit insurance

The Philippine Deposit Insurance Corp. (PDIC) has signed a landmark agreement with the World Bank Group to develop a risk-based assessment system (RBAS) for deposit insurance, a move seen to strengthen the country’s financial safety net and align it with global standards.

- By KEISHA TA-ASAN

PDIC president and CEO Roberto Tan and World Bank-International Bank for Reconstruction and Development (IBRD) country director Zafer Mustafaoglu formalized the advisory engagement in Makati on June 26.

Under the agreement, the IBRD will conduct a comprehensive study on the feasibility and design of a risk-based premium framework, which would determine banks’ deposit insurance contributions based on their individual risk profiles.

Currently, banks pay uniform premiums to the Deposit Insurance Fund.

The shift to a risk-based system would align the cost of insurance with the risk each lender poses, encourage prudent risk management, and reduce moral hazard, the PDIC said.