The benefits and advantages of invigorating the financial system and overall economy would be enjoyed by depositors with the proposed amendments to the Philippine Deposit Insurance Corporation Charter, which includes among others, the rise in the maximum deposit insurance coverage of PDIC from P500,000 to P1 million.
Senator Sonny Angara, who presided over the Subcommittee on Banks, Financial Institutions and Currencies virtual public hearing on amending PDIC Charter also proposed to attach PDIC to the Bangko Sentral ng Pilipinas.
He said the proposed amendments aim to remove the regulatory overlap between the BSP and the PDIC. There should be only one regulator for banks and that should be the BSP.
The PDIC can, therefore, focus on its role as a deposit insurer and as a liquidator.
“By sharpening the focus of the PDIC to that of a “pay box” for insurance claims and as liquidator of failed banks, we will ensure even better institutional efficiency than what we have at present,” he said. Meanwhile, a party-list legislator on Friday backed the enactment of a bill putting an interest rate cap on credit card and consumer loans offered by banks and other financial institutions.
“It is high time that we put an end to predatory and abusive lending practices, which have been among the greatest threats to Filipino families working to achieve financial security,” Deputy Speaker and Bagong Henerasyon Rep. Bernadette Herrera said.
House Bill 7967, filed by Bataan Rep. Geraldine Roman, proposes amendments to the Usury Law that will cap interest rates for credit cards and otherwise set a prescribed range of fixed rates for various forms of lending.
Senator Imee Marcos asked Bangko Sentral ng Pilipinas Governor Benjamin Diokno if they are open to the increase in the deposit insurance.
“So, inflation wise and given the other indexes, is P500,000 to P1 million a very large jump or is it reasonable?” Marcos asked.
Senator Ramon Revilla Jr. underscored the importance of the increase to encourage the public to deposit and increase their savings in the bank.
Revilla, who authored Senate Bill 1260, which seeks to increase the maximum deposit insurance coverage, amending for the purpose Republic Act No. 3591, otherwise known as the PDIC Charter, said seven out of 10 adults keep their savings at home.
He said the 2015 National Baseline on Financial Inclusion conducted by the BSP also showed that 32.7 percent of adults with savings put their money in banks while others save through cooperatives (7.5%), non-stock savings and loan associations (0.8%) and other informal savings groups (2.6%).
“Strengthening the deposit insurance coverage system will invite the public to deposit their monies in banks and will encourage existing bank clients to increase their deposits in the bank. And of course, looking at the bigger picture, a strong insurance coverage system will surely invigorate our financial system and our economy,” Revilla said.
Meanwhile, Minority Leader Franklin Drilon pointed out the “wide disparity” in the positions of resource persons in a very crucial and critical aspect of Senate Bills 1260 and 2089, which is the increase in the amount of maximum deposit insurance coverage.
The BSP and the Department of Finance support the increase from P500,000 to P1 million while the private sector is pushing for a P675,000 increase.
“Indeed, we should examine this closely because of the additional cost to the banks considering that indeed, there might be a need to increase the deposit insurance fund, the assessment from the present 1/5 of one percent to 2/5 of one percent,” Drilon said.
BSP Governor Benjamin Diokno confirmed that in doubling the coverage from P500,000 to P1 million, adjustments have to be made to ensure the sustainability of the insurance coverage.
He said they would evaluate the inflation indicators and consider the proposal but admitted that the additional P500,000 may not be appropriate at this time.
But he expressed full support to the laudable objectives of the measures. He noted that the increase in the amount of maximum deposit insurance coverage to an amount indexed to inflation and in consideration of other economic factors, would give the country’s deposit insurer the needed flexibility.