AN ACT INCREASING THE MAXIMUM DEPOSIT INSURANCE COVERAGE

Case Overview and Summary

Statement of State Policy and Objectives
Section 1: Declares the policy to strengthen the deposit insurance system, protect it from illegal schemes, and safeguard the interests of depositors by providing insurance coverage and helping develop a stable banking system.

Definition of Deposit and Exclusions
Section 2: Amends the definition of "deposit" to include obligations determined by the PDIC Board as deposit liabilities, subject to certain exclusions:
• Investment products, trust accounts, and similar instruments (Section 2(1))
• Unfunded, fictitious, or fraudulent deposit accounts (Section 2(2))
• Accounts constituting unsound banking practices, as determined by the PDIC after due process (Section 2(3))
• Deposits determined to be proceeds of unlawful activities (Section 2(4))

Definition of Insured Deposit and Coverage
Section 3: Amends the definition of "insured deposit" to increase the maximum coverage to Five hundred thousand pesos (P500,000.00) per depositor, with specific provisions for joint accounts and juridical entities (Section 3). The coverage can be adjusted in case of systemic threats, subject to approval (Section 3).

Payment of Increased Coverage
Section 4: For the first three years, the PDIC will cover up to Two hundred fifty thousand pesos (P250,000.00), and the excess up to Five hundred thousand pesos (P500,000.00) will be covered by the National Government, subject to annual appropriation (Section 4).

Bank Examination Authority
Section 5: Amends the PDIC's authority to conduct bank examinations, allowing special examinations in case of threatened or impending closure, and inquiries into deposit accounts for unsound banking practices (Section 5).

Indemnification of PDIC Officials
Section 6: Provides indemnification for PDIC directors, officers, employees, and agents against liabilities arising from the performance of their functions, unless found to be in willful violation, bad faith, malice, or gross negligence (Section 6).

Tax Exemptions
Section 8: Declares the policy to preserve the Deposit Insurance Fund and provides tax exemptions for the PDIC, including income tax, final withholding tax, value-added tax on assessments, and local taxes, after a five-year period (Section 8).

Bond Issuance
Section 10: Authorizes the PDIC to issue bonds, debentures, and other obligations, with Presidential approval, for liquidity and financial assistance purposes, with tax exemptions and government guarantees (Section 10).

Splitting of Deposits
Section 11: Amends the definition of "splitting of deposits" to include the transfer of deposits into multiple accounts within 120 days before a bank holiday or closure order to avail of maximum insurance coverage (Section 11).

Organizational Structure Review
Section 12: Grants the PDIC Board the authority to review and adopt a new or revised organizational structure (Section 12).

Joint Congressional Oversight Committee
Section 13: Creates a joint congressional oversight committee to oversee the implementation of the Act (Section 13).