Still a long way to go

The Philippine Deposit Insurance Corp. (PDIC) has doubled the maximum deposit insurance coverage (MDIC) in banks from P500,000 to P1 million per depositor effective today, March 15.

- MARY ANN LL. REYES

According to the PDIC, the upward adjustment in the MDIC is aimed at providing enhanced protection to the depositing public and is a proactive measure to reinforce confidence in the Philippine banking system as well as to contribute to financial stability.

It explained that the higher MDIC will not only protect and secure more depositors' savings but more importantly, will help stabilize deposit movements, maintain liquidity in the banking system and prevent any possible panic-based runs.

The state deposit insurer also emphasized that at the new MDIC of P1 million, more deposits will be fully insured at 136 million deposit accounts, or 98.6 percent of the total deposit accounts of 138 million, compared with 97.6 percent at the previous MDIC of P500,000 based on data as of Sept. 30 last year.

In terms of amount, insured deposits will increase to P4.8 trillion, or 24.5 percent of total deposits of P19.5 trillion, compared with 18.3 percent at the old MDIC.

The increase has been long overdue given that the last time the MDIC was adjusted was in 2009 as a preemptive confidence-building response to the global financial crisis in 2008.

In 1963, the MDIC was set at P10,000 per depositor per bank and then increased five times since then, to P15,000 in 1978, P40,000 in 1984, P100,000 in 1992, P250,000 in 2004 and P500,000 in 2009.

Deposits in all banks, including universal banks, commercial banks, savings and mortgage banks, rural banks, private development banks, cooperative banks, savings and loan associations and even digital banks, as well as branches and agencies in the Philippines of foreign banks and all other corporations authorized to perform banking institutions in the Philippines, are insured with the PDIC.