What is PDIC? A Comprehensive Overview to the Philippine Deposit Insurance Corporation

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The Philippine Deposit Insurance Corporation (PDIC) is a crucial government-run deposit insurance fund in the Philippines. 

Established on June 22, 1963, through Republic Act 3591, PDIC plays a pivotal role in safeguarding the interests of depositors and fostering confidence in the banking sector. 

Operating under the mandate of Republic Act 3591, PDIC ensures the security of deposits, offering a guarantee for amounts up to ₱500,000.

The primary mission of PDIC is to provide protection to small investors and depositors, offering reassurance in the financial landscape. 

By instilling a sense of security in the banking system, PDIC contributes to the overall stability and trustworthiness of the country’s financial institutions. 

Importantly, PDIC aligns its strategies with international best practices, receiving guidance from the International Association of Deposit Insurers (IADI). 

This collaborative approach ensures that PDIC remains attuned to global standards, reinforcing its commitment to effective deposit insurance practices and continuous improvement in the realm of financial security.

In this article, we will take a deep dive into the rich history of PDIC, exploring its pivotal role in the Philippine financial landscape. 

Additionally, we’ll also look deep to the various functions and responsibilities that make PDIC a cornerstone in the protection of depositors and the promotion of confidence in the banking sector. 

Keep reading, and as you scroll down, you’ll find an insightful list of jobs that contribute to PDIC’s critical mission and operations.

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History of PDIC:

PDIC

Establishment of PDIC (1963):

On June 22, 1963, the Philippine Deposit Insurance Corporation came into existence through Republic Act 3591. 

This legislation laid the foundational framework for the corporation, outlining key provisions that aimed to ensure the stability and security of the nation’s banking system. The establishment included:

  1. Deposit Insurance Coverage:
  • Provision for deposit insurance coverage to safeguard the interests of banks and depositors.
  1. Maximum Deposit Insurance:
  • Set a maximum deposit insurance limit of P10,000 per depositor, offering financial protection to individuals with bank deposits.
  1. Assessment Rate:
  • Defined a maximum assessment rate of 1/12 of 1% on assessable deposits per annum, establishing a sustainable funding mechanism for the insurance coverage.
  1. Voluntary Insurance Membership:
  • Introduced a voluntary membership program, allowing banks to opt into the deposit insurance coverage provided by PDIC.
  1. Permanent Deposit Insurance Fund:
  • Established a Permanent Deposit Insurance Fund with an initial capital of 5 million pesos, ensuring a stable financial foundation for PDIC operations.
  1. Board of Directors:
  • Formation of a 3-member Board of Directors to oversee and guide the policies and decisions of PDIC, contributing to effective governance.

The enactment of Republic Act 3591 marked a pivotal moment in the financial landscape of the Philippines, creating a mechanism that would bolster public confidence in the banking sector and protect the interests of depositors.

1960s-1970s: Evolution of Philippine Deposit Insurance Corporation

1969: Compulsory Membership and Initiation of Assessments:

In a pivotal move, Republic Act 6037, enacted in 1969, made Philippine Deposit Insurance Corporation membership compulsory for all banks. This legislative development aimed to ensure broader participation in the deposit insurance program. 

Subsequently, in 1970, Philippine Deposit Insurance Corporation commenced the collection of assessments from banks, setting the maximum assessment rate at 1/18 of 1% of net assessable deposits per annum.

1970: Inaugural Payout and Innovative Claims Facilitation:

During the same year, Philippine Deposit Insurance Corporation marked a significant milestone by authorizing the first payout to the Rural Bank of Nabua. 

The Board’s authorization initiated a claims payment process, with an initial assignment of one claim agent. However, recognizing the need for efficiency, a transfer deposit scheme with the Rural Bank of Rinconada was later implemented on July 6, 1970. 

This innovative approach streamlined claims payment procedures, demonstrating Philippine Deposit Insurance Corporation commitment to effective and timely operations.

1978: Expansion of Deposit Insurance Coverage:

Presidential Decree 1451, implemented in 1978, brought about a noteworthy enhancement in depositor protection. 

The maximum deposit insurance coverage was increased to 15,000 pesos per depositor, a proactive measure to fortify the financial security of depositors.

1980s: Reforms and Recognition by World Bank:

In 1984, the 1980s ushered in a series of reforms under Presidential Decrees 1897 and 1940. These reforms included an increase in the maximum deposit insurance coverage to P40,000 per depositor and significant changes in Philippine Deposit Insurance Corporation role. 

Philippine Deposit Insurance Corporation became a preferred creditor over unsecured creditors, trust accounts were excluded from insurance coverage, and a minimum assessment premium of P250 was set by banks.

In 1988, a World Bank report recognized Philippine Deposit Insurance Corporation potential, recommending an expanded role in supervising/examining banks and handling distressed banks. 

This led to the drafting of an Institutional Strengthening Program, laying the groundwork for organizational restructuring and innovations in systems and procedures.

1989: Introduction of Liquidity Pools:

Later in 1989, PDIC introduced liquidity pools to contribute to the stability of the rural banking system.

These pools addressed temporary liquidity requirements by leveraging contributions from rural banks matched by the Land Bank of the Philippines (LBP). 

The funds were strategically invested in high-yielding, risk-free government securities, providing support to member rural banks during liquidity crises. After four years, the initiative saw the creation of 27 liquidity pools involving 429 rural banks.

1990s: Transformation and Legislative Changes:

In the early 1990s, PDIC actively participated in the Countryside Financial Institutions Enhancement Program (CFIEP) alongside the Central Bank and Land Bank of the Philippines. 

This program aimed at transforming rural banks into formidable agents of countryside development. The multi-faceted CFIEP encompassed modules for equity infusion, capital enhancement, and incentives for merging and consolidation.

In 1992, Republic Act 7400 brought about significant amendments, increasing the maximum deposit insurance coverage to P100,000 and introducing changes in assessment rates, the Permanent Insurance Fund, and the authority to conduct independent examinations of banks. 

Further, Philippine Deposit Insurance Corporation role was expanded to include assuming liabilities as an additional mode of financial assistance, along with being mandated as the receiver and liquidator of banks ordered closed by the Monetary Board. 

The composition of the Board was also modified, designating the Finance Secretary as Chairman, Philippine Deposit Insurance Corporation President as Vice-Chairman, the Bangko Sentral ng Pilipinas Governor as a member, and two representatives from the private sector.

In the same year, Philippine Deposit Insurance Corporation established its office building at 2228 Pasong Tamo Street, Makati City.

1996: Innovations in Claims Payment:

By 1996, Philippine Deposit Insurance Corporation adopted innovative measures to facilitate claims payment.

These included the approval of a scheme allowing immediate payment of claims with balances not exceeding P500 after validation, direct cash payment for accounts not exceeding P1,000, simplification of documentary requirements for claims related to deceased depositors, and the establishment of an emergency pay-out facility. 

This facility empowered the Philippine Deposit Insurance Corporation President to approve payments even before the official start of claims settlement operations, responding to the humanitarian needs of depositors. The amount was subsequently increased to the Maximum Deposit Insurance Coverage (MDIC) of P100,000.

The collective developments in the 1960s-1970s and subsequent years reflect PDIC’s proactive approach, continuous evolution, and commitment to financial stability and depositor protection.

2000s: Strengthening Depositor Protection and Institutional Enhancements

2004: Amendments to Philippine Deposit Insurance Corporation Charter (Republic Act 9302):

In 2004, the Philippine Deposit Insurance Corporation underwent substantial amendments with the passage of Republic Act 9302, aimed at fortifying depositor protection. Key provisions of these amendments included:

  1. Increase in Maximum Deposit Insurance Coverage:
  • The maximum deposit insurance coverage was raised from P100,000 to P250,000, reflecting a significant boost in financial protection for depositors.
  1. Restoration of Philippine Deposit Insurance Corporation Examination Authority:
  • Restoration of Philippine Deposit Insurance Corporation authority to examine banks, contingent upon prior approval by the Monetary Board, enhancing the regulatory oversight of the banking sector.
  1. Continuing Insurance Coverage:
  • Ensuring the continuity of insurance coverage for banks, emphasizing the commitment to safeguarding depositors’ interests.
  1. Grant of Financial Assistance to Distressed Banks:
  • Authorization for Philippine Deposit Insurance Corporation to provide financial assistance to distressed banks under systemic risk conditions, contributing to the stability of the financial system.
  1. Authority to Investigate Banks:
  • Empowerment for Philippine Deposit Insurance Corporation to investigate banks for frauds, irregularities, and anomalies based on complaints received and reports of bank examinations, reinforcing vigilance and regulatory control.
  1. Enhancement of Receivership and Liquidation Authority:
  • Strengthening Philippine Deposit Insurance Corporation receivership and liquidation authority, ensuring effective and expedient resolution in case of bank closures.
  1. Achievement of Single Digit Turnaround Time:
  • A notable accomplishment was the achievement of a single-digit turnaround time in claims settlement operations from bank takeover. The average turnaround time was reduced to an impressive 8 days.

PDIC’s Role as Liquidator (2004):

Philippine Deposit Insurance Corporation, as the liquidator, successfully completed 78 final projects of distribution (POD) for closed banks.

POD, referring to the specific distribution plan of a closed bank’s assets, underwent scrutiny and approval by the Liquidation Court.

2009: Further Amendments and Initiatives:

  • Additional amendments in 2009, through Republic Act 9576, brought significant changes to the Philippine Deposit Insurance Corporation Charter:
  • An increase in the maximum deposit insurance coverage from P250,000 to P500,000.
  • Granting flexibility to adjust coverage in response to conditions threatening the monetary and financial stability of the banking system, subject to the President’s approval.
  • Provision of institutional and financial strengthening measures to mitigate moral hazard and reinforce the Deposit Insurance Fund.
  • Philippine Deposit Insurance Corporation laid the foundation for new initiatives aimed at revitalizing the banking sector, especially rural banks:
  • The Strengthening Program for Rural Banks, funded at P5 billion.
  • The Investor-Investee Helpdesk, a support program.
  • Institutional enhancements included the adoption of the Corporate Governance Code and the implementation of the Citizen’s Charter.
  • Notably, President Jose C. Nograles was elected to the Executive Council of the International Association of Deposit Insurers (IADI), showcasing Philippine Deposit Insurance Corporation global recognition and leadership in deposit insurance.

PDIC @ 60: A Journey of Depositor Protection (1963 – 2023)

1970: Inaugural Claims Settlement Operations (CSO):

  • The first CSO was conducted in the closed Rural Bank of Nabua on July 6, 1970. Initially, one claim agent was assigned to handle the CSO, later implementing a transfer deposit scheme with the Rural Bank of Rinconada to facilitate deposit insurance claims payment.

1992: Inauguration of Philippine Deposit Insurance Corporation Office Building/Headquarters:

  • Philippine Deposit Insurance Corporation office building located at 2228 Pasong Tamo Street, Makati City, was inaugurated, establishing a dedicated space for the corporation’s operations.

1993: Exercising Authority and Depositors Protection Bureau Launch:

  • Philippine Deposit Insurance Corporation exercised its authority to terminate the insured status of 25 delinquent banks.
  • The Depositors Protection Bureau was launched, serving as a quick response action desk to address depositor queries and complaints.

1995: Streamlined Turnaround Time:

  • Joint takeover and presettlement examination activities were implemented, resulting in a shortened turnaround time from bank takeover to the start of claims settlement operations.

2003: Depositor Protection and Awareness Week (DPAW) Proclamation:

  • Presidential Proclamation No. 358 declared June 16 to 22 of every year as Depositor Protection and Awareness Week (DPAW), reinforcing depositor confidence in the country’s banking system.

2013: International Recognition and Guidebook Launch:

  • IADI bestowed the “Deposit Insurance Organization of the Year” Award for 2013 upon Philippine Deposit Insurance Corporation.
  • Philippine Deposit Insurance Corporation launched the guidebook “Usapang Pera: A Philippine Deposit Insurance Corporation Guidebook on Basic Banking and Financial Transactions” during the IADI International Conference on Financial Inclusion.

2015: Philippine Deposit Insurance Corporation-Gawad Kalinga Village and Website Launch:

  • Groundbreaking for the Philippine Deposit Insurance Corporation-Gawad Kalinga Village in Lawaan, Eastern Samar.
  • Launch of a visually appealing, streamlined, user-friendly website for greater usability.

2016: Social Media Presence:

  • Philippine Deposit Insurance Corporation official Facebook and Twitter accounts were launched to promote social media presence, engage the public, and address depositor information needs.

2017: Corporate Branding and Logo Approval:

  • Approval of a new Philippine Deposit Insurance Corporation logo as part of the institutionalization of its corporate brand.

2018: New Logo, Insurance Statement, and Tagline:

  • On its 55th anniversary, Philippine Deposit Insurance Corporation launched a new corporate brand with a revised logo, insurance statement, and tagline.

2019: PDIC Caravan – Abot Lingkod Program:

  • Successful pilot run of the Philippine Deposit Insurance Corporation Caravan – Abot Lingkod Program in Davao City, bringing frontline services closer to regional stakeholders.

2021: “Maniguro, Magbangko” Campaign and Building Renovation:

  • Nationwide public awareness campaign called “Maniguro, Magbangko.”
  • Blessing and inauguration of the newly renovated Philippine Deposit Insurance Corporation Chino Bldg., marking the homecoming to its original headquarters location.

2022-2023: Accessibility Expansion and Global Contributions:

  • Expansion of services in two office locations in Makati City.
  • Hosting of technical workshops and meetings, including the Joint Task Force Meeting of the IADI Asia-Pacific Regional Committee.

2023: 60th Anniversary Celebration:

  • Philippine Deposit Insurance Corporation celebrated its 60th anniversary with a gala event at the Philippine International Convention Center on June 23, 2023, themed “60 Years of Championing Depositor Protection and Fostering Financial Stability.

Conclusion:

As a vital pillar in the Philippine Deposit Insurance Corporation plays a crucial role in safeguarding depositors and fortifying the resilience of the nation’s banking sector. 

By joining Philippine Deposit Insurance Corporation or exploring opportunities with other government agencies, you become part of a collective effort dedicated to promoting economic stability and securing the financial well-being of the Filipino people. 

Disclaimer:

The Philippine Go does not collect fees and is not a hiring agency, nor is it related to any hiring agency for employment abroad. 

All information contained here is solely for informational purposes and rightfully belongs to its rightful owner. 

Attached in the last section of the content are references for further verification, if needed. Read more

Reference:

1. Wikipedia contributors. (n.d.). Philippine Deposit Insurance Corporation. In Wikipedia. Retrieved 2023, from [https://en.wikipedia.org/wiki/Philippine_Deposit_Insurance_Corporation]

2. Philippine Deposit Insurance Corporation. (n.d.). Historical Highlights and Corporate Milestones. Retrieved 2023, from [https://www.pdic.gov.ph/files/ccd/Historical%20Highlights_Corporate%20Milestones.pdf]