Deposit insurance is the guarantee that your money is safe when in the bank (with a few details in the fine print). Locally, deposit insurance is handled by the Philippine Deposit Insurance Corporation (PDIC), which is an insurance fund under the Department of Finance.
These are the four major things that you should know:
1. For banks, PDIC membership is mandatory.
This is true for all local banks, and foreign banks that are licensed to operate in the Philippines. So, no matter where you choose put your money, it will automatically be covered. Peso and foreign currency deposit accounts are insured by PDIC, while the following are not:
- Investment products such as bonds, securities and trust accounts
- Deposit accounts which are unfunded, fictitious or fraudulent
- Deposit products constituting or emanating from unsafe and unsound banking practices
- Deposits that are determined to be proceeds of an unlawful activity as defined under the Anti-Money Laundering Law
2. PDIC will cover a maximum of P500,000 per depositor, per bank.
This is the maximum for individually owned deposit accounts. If you have several such accounts, whether they are from a single branch or different branches, their values will be combined to determine how much is insured.
Joint accounts are insured separately. In this case, the deposit up to the maximum amount will be divided equally among all account owners, unless a different sharing is mentioned in the document of deposit. If you have more than one joint account, their values will also be combined for coverage up to P500,000.
Also, if the joint account is held by both a juridical person or entity along with one or more natural persons, the maximum insured deposit will belong entirely to the juridical person or entity.
If your deposits are higher than the maximum insured amount, you can file a claim for the rest of the money against the assets of the closed bank. This claim should be filed with the official liquidator within 60 days of the publication of the bank’s closure, but payment will depend on the available assets and approval of the Liquidation Court.
3. PDIC covers only the risk of a bank closure ordered by the Monetary Board.
If the bank loses money because of theft, fire, or has to close because of strike or public disorder, revolution or civil war, your deposits will not be covered by PDIC.
4. The insurance premium is paid by the bank.
You won’t have to worry about paying for this insurance, because the bank shoulders the cost. The bank is assessed 1/5 of 1% per annum of its assessment base.