The Philippine Deposit Insurance Corporation (PDIC) said it will double the maximum insurance coverage for bank deposits from P500,000 to P1 million per depositor starting March 15.
PDIC, in charge of safekeeping bank deposits, said its board of directors “approved the upward adjustment in the MDIC to provide enhanced protection to the depositing public” and “prevent any panic-based runs.”
The PDIC in a statement on Friday said “It will not increase the assessment being levied on banks.”
Banks pay the insurance coverage for deposits, not the depositors, according to the PDIC.
At P1 million, more deposits will be fully insured—98.6 percent of the total deposit accounts of 138 million, compared with 97.6 percent at an MDIC of P500,000, based on its data as of September 30, 2024, PDIC said.
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 an MDIC of P500,000, the PDIC said.
The MDIC was last adjusted in 2009 to P500,000.00 as a confidence-building response to the global financial crisis in 2008, remaining at that level for the last 16 years.
In 1963, the MDIC was set at P10,000 per depositor per bank and has since been adjusted five times at P15,000 in 1978, P40,000 in 1984, P100,000 in 1992, P250,000 in 2004, and P500,000 in 2009, the PDIC said.
The state deposit insurer said the upward adjustment in the MDIC will provide enhanced protection to the depositing public, build confidence in the Philippine banking system and contribute to financial stability.
The higher MDIC will protect and secure more depositors’ savings and more importantly, help stabilize deposit movements, maintain liquidity in the banking system, and prevent any panic-based runs, PDIC said.
Greater confidence
Michael Ricafort, RCBC chief economist, said the higher deposit insurance coverage per depositor “would provide greater confidence for the depositing public.”
Ricafort quickly added, “This would also require a higher Deposit Insurance Fund to finance any future claims for deposit insurance by the depositing public.”
The PDIC said the Deposit Insurance Fund (DIF) “remains adequate to meet the potential insurance risks that may arise.”
The PDIC said, “The ratio of the DIF to estimated insured deposits is expected to reach 5.3 percent in 2025 and grow to meet the new target ratio of 8.0 percent by 2031 based on a build-up period aligned with international best practices.”
