MANILA, Philippines—A proposal for further amendments to the Philippine Deposit Insurance Corp.’s (PDIC) already-expanded charter has been filed before Congress to improve the agency’s ability to make the closure of failed banks a smoother process.
The proposed changes also aim to make it easier for depositors of closed banks to file their insurance claims and get their money faster.
“It seeks to enhance bank resolution and depositor protection by establishing a framework that will address gaps and allow the Philippines to conform to international standards,” House committee on banks and financial intermediaries Chair Rep. Nelson Collantes said in a statement.
Collantes on May 12 filed House Bill 4392, which if approved, would amend the deposit insurer’s current charter.
Among the main changes the bill asked for was the enhanced resolution framework would provide PDIC with more options to resolve problem banks.
A more efficient and prompt resolution process shall help minimize the negative impact of bank closures on the stability of the banking industry, the PDIC said in a statement.
It would also maximize recovery of depositors and other creditors, and allow the prompt settlement of their claims.
PDIC vice president Cristina Orbeta said the proposed amendments would help strengthen the deposit insurer, which plays a vital role in ensuring the stability of the banking system.
“Lessons from the financial crisis taught us that a strong resolution and liquidation framework over banks is crucial to depositor protection and to the stability of the banking system,” Orbeta said.
The last time the PDIC’s charter was amended was 2009, when ex-banker Jose C. Nograles headed the deposit insurer. The main change to the charter then was to raise the maximum deposit insurance to the current P500,000.
The new bill proposes measures to introduce additional modes of liquidating a closed bank such as bridge banking, to enhance PDIC’s authority as liquidator of closed banks.
Adhering to the principle that bank rehabilitation should happen while the bank is still open, the bill is also pushing for the removal of the 90-day receivership period for closed banks.