President Aquino has signed into law amendments to the charter of state-run Philippine Deposit Insurance Corp. (PDIC) aimed at better protecting depositors against problematic banks.
In a statement Wednesday, PDIC said about 50 million deposit account holders as of end-2015 would benefit from Republic Act (RA) No. 10846 as the law further enhanced its authority to provide depositor protection.
“The law also gives PDIC fiscal and administrative autonomy and authority to resolve problem banks while still open,” it added.
“The amendments to the deposit insurance law will ultimately redound to the benefit of the depositing public. The enhanced authorities will afford depositors better protection as PDIC may now address risks posed by problem banks early on,” PDIC president Cristina Q. Orbeta said.
RA 10846 “will also enable PDIC to perform its role in maintaining financial stability and managing the Deposit Insurance Fund,” Orbeta added, referring to the agency’s funding source for deposit insurance payments as well as assistance to distressed banks.
PDIC noted that under RA 10846, “depositors will have quicker access to their insured deposits in the event of bank closure since PDIC now has the authority to pay insured deposits without netting out depositors’ loan obligations with the closed bank and based on evidence of deposits and not on the closed bank’s records alone.”
“To further protect depositors from unsafe and unsound banking practices of some banks, the law also restored PDIC’s authority to terminate the insured status of banks that engage in unsafe and unsound banking practices,” PDIC added.
Also, the amended charter provided for an “enhanced resolution authority” that would allow PDIC to intervene early on in problem banks or open bank resolution.