More depositors benefit from doubled insurance coverage

More depositors in the Philippines are now benefiting from enhanced protection through the Philippine Deposit Insurance Corp.’s (PDIC) doubled maximum deposit insurance coverage (MDIC) of P1 million per depositor, per bank, effective March 15, 2025.

The MDIC represents the maximum amount of a depositor’s money in an insured bank guaranteed by the PDIC.

According to PDIC data from end-December 2024, the new MDIC of P1 million will fully insure 147 million accounts. This is an increase of nearly 1.5 million accounts compared to if the MDIC had remained at P500,000.

The new MDIC now fully insures 98.6 percent of total deposit accounts in the Philippine banking system, up from the previous coverage of 97.6 percent.

PDIC said that in terms of value, insured deposits are expected to rise to P5.3 trillion, an increase of P1.3 trillion compared to the amount if the MDIC had stayed at P500,000. The new MDIC now covers 24.1 percent of total deposits, up from 18.0 percent at the previous P500,000 MDIC.

The increase in the MDIC has been welcomed by both banks and depositors, key stakeholders of the PDIC. Prior to the new MDIC’s effectivity, the PDIC held consultation meetings with major bank associations, whose officials expressed support. The expanded protection aims to increase depositor confidence without raising the assessment levied on banks.

“It’s a timely move given that limits have not been increased in years,” said Jose Teodoro Limcaoco, president of the Bankers Association of the Philippines (BAP).

Mary Jane Perreras, president of the Chamber of Thrift Banks (CTB), said the move reinforces trust in the banking system, especially for senior citizens and retirees who rely on deposit security.

Rural Bankers Association of the Philippines (RBAP) president Jose Paolo Palileo also expressed support for the new MDIC. “This further strengthens public confidence in the banking system, and comes at no extra cost to insured banks, thereby allowing them to attract more private investment in the form of savings,” he said.

The increase in the MDIC was approved by the PDIC board of directors in accordance with Republic Act No. 3591, as amended (PDIC Charter). The charter authorizes the PDIC board to adjust the MDIC based on inflation or other appropriate economic indicators.

This marks the first independent adjustment of the MDIC by the PDIC, following recent amendments to its charter. This is also the first MDIC increase in history that did not require Congressional approval, allowing for more timely responses regarding deposit insurance.

The decision to double the MDIC was based on a methodology recommended by the World Bank, aiming to restore the value of the MDIC set in 2009, which had been diminished by inflation. Before March 2025, the MDIC was 500,000 pesos per depositor, per bank.

The adjustment is a proactive measure to reinforce confidence in the Philippine banking system and contribute to financial stability, according to PDIC. The higher MDIC is expected to protect more depositors’ savings, stabilize deposit movements, maintain liquidity in the banking system, and help prevent panic-based runs, it said.

The PDIC affirmed its commitment to depositor protection and financial stability through the MDIC increase, complemented by its roles as a co-regulator of banks and receiver of closed banks.