Am I Covered? – Deposit Insurance by PDIC

A lot of people would always want to put their money in a savings account or in a time deposit account simply because of this – PDIC (Philippine Deposit Insurance Corporation) covered.

But what does this include and exclude and what are the things to remember when it comes to it? Below are the important things to take note of and to understand.

PDIC pays deposit insurance on all valid deposits up to the Maximum Deposit Insurance Coverage (MDIC) of P500,000 per depositor of a closed bank. Deposits are considered valid if, upon determination of PDIC, these deposits are recorded in the bank’s records, and are EVIDENCED by inflow of cash.

For purposes of computing deposit insurance, accounts maintained in the same right and capacity for a depositor’s benefit, whether in his own name or in the name of others, are added together and in NO case exceed the MDIC.

 

What are covered by PDIC deposit insurance?

PDIC insures valid deposits in domestic offices of its member-banks, as follows:

By Deposit Type

Savings, Special Savings, Demand/Checking, Negotiable Order of Withdrawal (NOW), Time Deposits

By Deposit Account Type

Single Account, Joint Account, and Account “By”, “In Trust For” or “For the Account of” (FAO) another person

By Currency

Philippine peso, Foreign currencies considered as part of BSP’s international reserves

 

PDIC Member-Banks
Consist of institutions authorized by the Bangko Sentral nf Pilipinas (BSP) to perform banking functions in the Philippines:

  1. Banks incorporated under Philippine laws, such as commercial banks, savings banks, mortgage bank, development bank, rural bank and cooperative banks and stock savings and loan associations.
  2. Domestic branches of foreign banks.

 

Single Accounts
Single Accounts are individually-owned accounts or accounts held under one name, either as natural person or juridical entity:

  • Natural person refers to any individual person. Single proprietors are considered natural persons.
  • Juridical entity refers to a corporation, partnership or cooperative including registered association.

 

Joint Accounts

Joint Accounts are held under MORE than one name. A joint account regardless of whether the conjunction and, or, and/or is used shall be insured SEPARATELY from single accounts.
Unless a different sharing is stipulated in the documents, the insured amount up to P500,000 shall be divided EQUALLY between among co-owners of a joint account.
The total share of a co-owner in several joint accounts may EXCEED P500,000 but will only be insured up to the MDIC of P500,000.

 

BY, ITF, FAO Accounts
In a “By account, Ana by Ben, Ana is the depositor
In an “In Trust For” (ITF) account, Ana in Trust for Ben, Ben is the depositor.
In a “For the Account of” (FAO) account, Ana for the Account of Ben, Ben is the depositor.
In an account with combined Joint and FAO/ITF, Ana and/or David In Trust for Ben, Ben is the depositor.

 

Important Reminders:

If a depositor is the sole beneficial owner of a single, FAO, By and ITF accounts, the consolidated balances of these accounts shall be insured up to P500,000.
The depositor’s total shares in all his/her joint accounts shall be separately insured up to P500,000.
A depositor with single accounts and joint accounts may have insured deposits of up to P1,000,000.

 

Illustrative Examples:

 

Fe Santos’s insured deposit if she has the following four deposit accounts in the same bank:

Account Name

Deposit (in PHP)

Insured Deposit of Fe Santos (in PHP)

Fe Santos 100,000 100,000
Ben Santos for the account of

Fe Santos

100,000 100,000
Charlie Santos in trust for

Fe Santos

100,000 100,000
Fe’s Store (Sole Proprietor) 700,000 200,000
Total 1,000,000 500,000
  • Mrs Fe santos is entitled to a MDIC coverage of P500,000 – after determination that she is the sole beneficial owner of the four accounts.

 

Fe Santos’s insured deposit if she has the following three joint accounts in the same bank:

Account Name Deposit (in PHP)

Fe’s Share in the Insured Deposit (in PHP)

Fe Santos or Ben Santos 500,000 250,000
Fe Santos and Charlie Santos 1,000,000 250,000
Fe Santos and/or Divina Santos 1,000,000 0
Total 2,500,000 500,000
  • Mrs. Fe does not have any insured deposit share since she has REACHED the maximum insurance coverage totaling of P500,000 in the 2 joint accounts she has with Ben and Charlie Santos.

 

Fe Santos’s insured deposit for all her single and joint accounts in the same bank:

Account Name

Deposit (in PHP)

Fe’s Share in the Insured Deposit (in PHP)

All single accounts of Fe Santos 1,000,000 500,000
All joint accounts of Fe Santos 2,500,000 500,000
Total 3,500,000 1,000,000

*To help depositors estimate their insured deposits, visit the Deposit Insurance eCalculator.

*For more comprehensive examples click here.

 

Per PDIC Regulatory Issuance No. 2011-04:

For purposes of computing the insured deposits, ALL OBLIGATIONS or LOANS of the depositor with the CLOSED bank, as of bank closure, shall be DEDUCTED from the depositor’s total deposits with the said bank.

 

What are NOT covered by PDIC deposit insurance?

The following whether denominated, documented, recorded or booked as deposit by the bank, are excluded:

  1. Investment products such as bonds and securities, trust accounts and other similar instruments.
  2. Deposit accounts or transactions that are:
    • Unfunded, Fictitious or Fraudulent
    • Constitute and/or emanate from unsafe and unsound banking practices as determined by PDIC:
      1. Solicitation and acceptance of deposit outside bank premises including branches without BSP authority
      2. Non-compliance with minimum identification and documentation requirements in the opening of deposit accounts (AMLA).
      3. Allowing depositors to withdraw, deposit and/or transfer funds without proper documentation – deposit or withdrawal forms.
      4. Granting high interest rates, when bank has negative unimpaired capital and either a liquid assets-to-deposits ration of less than 10% or an operating loss.
    • Are determined to be PROCEEDS of an unlawful activity as defines in the Anti-Money Laundering Act (AMLA, Republic Act 9160, as amended).

 

Reference: PDIC.

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