2013, December 5. Philippine Deposit Insurance Corporation
(PDIC) - 50th Anniversary
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PHILIPPINE
DEPOSIT INSURANCE CORPORATION (PDIC) - 50th Anniversary
Philippine Deposit Insurance Corporation
(PDIC) is an attached agency of the Department of Finance.
It is a government-owned and
controlled corporation, created in 1963 by virtue of Republic Act
3591 for the purpose of insuring bank deposits.
Just like in the United States of
America, deposit insurance in the Philippines was borne out of the
need to stabilize the banking system from a rash of withdrawals that
led to bank runs.
In the U.S., disruptions caused by
bank failures occurred during the 1800’s up to the 1930’s.
While numerous solutions were put
forth, many of them were based on he deposit insurance principles.
Solutions to stabilize the U.S.
banking industry were originally implemented at the level of the
State and initially solicited support from banks on voluntary basis.
As the banking crisis in the U.S.
worsened in th 1930’s, the U.S. Congress passed the banking At of
1933 which created the Federal Deposit Insurance Corporation (FDIC).
By its very name, the FDIC provided
deposit insurance on a national level, starting at USD2,500 per
depositor and made membership by banks mandatory.
Thirty years later, the Philippines
went through a similar banking crisis.
In order to stabilize the situation
and restore confidence in banks, the Philippine government created
its own version of deposit insurance system through Republic Act
3591, which created the Philippine Deposit Insurance Corporation
(PDIC) on June 12, 1963 to protect depositors and help maintain
financial stability.
Unlike the Federal Deposit Insurance of the
U.S., the Philippines initially adopted a voluntary membership by
banks in PDIC.
Mr. Basilio Estanislao, then Special
Assistant to Central Bank Governor Andres Castillo and later
Director of the PDIC itself, was taked to prepare the manuscript of
Republic Act 3591.
Director Estanislao was quoted to have
said “The philosophy behind deposit insurance is for the government
to protect the small, unsophisticated depositors who comprise the
majority and not the big ones who are more discriminatory”.
The foundation for this statement of
Director Estanislao is confidence, the major ingredient that makes
any financial system flourish.
Take confidence away and the financial
system crumbles like a house of cards.
This is also why President Franklin D.
Roosevelt in his first “fireside chat” to the people of the United
States of America on March 12, 1933 said that “After all, there is
an element in the readjustment of our financial system more
important than currency, more important than gold, and that is the
confidence of the people”.
The PDIC commences operations in 1968
after the appointment of the Board of Directors and release of
PDIC’s initial permanent insurance fund in the amount of P5 million.
A year later, Republic Act 5571 made
banks’ membership with PDIC mandatory.
Thereafter, a series of government
actions led to the increase in minimum deposit insurance coverage
for depositors starting with just a maximum deposit insurance
coverage of P10,000 under the Republic Act 3591.
The PDIC Charter was further amended
in 2009 as a pre-emptive measure to build confidence in the banking
system amid the brewing global crisis during that time.
Aside from doubling of maximum deposit
insurance coverage to P250,000 to P500,000, the PDIC was granted the
flexibility to adjust the maximum deposit insurance coverage when
the financial stability of the banking system is threatened.
The latest amendments to the PDIC
Charter also provided institutional and financial strengthening
measures to build up the Deposit Insurance Fund and to reinforce
PDIC’s role as a member of the country’s financial safety net while
continually providing depositor protection.
PDIC’s co-regulatory powers were also
expanded in terms of determining insured deposits, examining deposit
accounts in cases of finding unsafe and unsound banking practices,
and conducting special bank examinations.
Over the decades, the PDIC has
broadened its role from providing depositor protection to help
maintain financial stability.
Committed to the interest of the
depositing public it serves, PDIC remains strong and resilient
moving closer to its vision of becoming a world-class organization
in depositor protection.