Showing posts with label Deposit Insurance. Show all posts
Showing posts with label Deposit Insurance. Show all posts
New Bank Deposit Insurance to take effect June 1, 2009
The new bank deposit insurance of 500 thousand pesos will take effect on Monday, June 1, 2009.
In last sunday's newspaper (May 17, 2009), one full page was dedicated to Republic Act No. 9576 (R.A. 9576), an act increasing the maximum deposit insurance coverage, otherwise knows as the PDIC charter. The following public advisory can be found on the same page.
President Gloria Macapagal-Arroyo signed into law Republic Act No. 9576 that amended the Charter of the Philippine Deposit Insurance Corporation (PDIC).
RA 9576 will take effect on Monday, June 1, 2009.
Upon the effectivity of the law, the Maximum Deposit Insurance Coverage shall be increased from P250,000 to P500,000 per deposition. PDIC is also given the following powers under the new law:
1. Authority to exclude certain deposit accounts and transactions from the coverage of deposit insurance.
2. Authority to conduct special bank examinations.
3. Authority to inquire into or examine deposit accounts under certain condition.
4. Authority to issue bonds and other debt issuance with sovereign guarantee.
The period within which splitting of deposit accounts is prohibited was likewise increased from 30 days to 120 days before bank holiday or closure.
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Update: New Bank Deposit Insurance of 500 Thousand Pesos
I wrote about the new deposit insurance of 500 thousand pesos last May 2, 2009. I asked the Bank of the Philippine Islands (BPI) as to when this will take effect. Here's their reply:
Kindly be advised that as per feedback from the concerned unit, the new insurance coverage was announced in newspapers last April 30, 2009. However, there are no implementing guidelines yet or any regulatory issuance from PDIC or BSP as of this time.
It seems like it will take some time before this new regulation will take effect. In the mean time, the bank deposit insurance will remain at 250 thousand pesos per depositor.
Important things to know about bank deposit insurance:
(source: http://www.pdic.gov.ph)
1. The maximum deposit insurance coverage is P250,000 per depositor. All deposit accounts by a depositor in a closed bank maintained in the same right and capacity shall be added together.
2. All peso and foreign currency savings deposit accounts, time deposit accounts, current or demand deposit or checking accounts in a bank licensed to operate by the Bangko Sentral ng Pilipinas (BSP) are insured with PDIC. However, deposit insurance coverage is not determined on a per-account basis. The type of account (whether checking, savings, time or other form of deposit) has no bearing on the amount of insurance coverage. Therefore, having several different types of account in the same name in an insured bank will not increase the bank deposit insurance.
3. The depositor of the closed insured bank should file a claim for his insured deposits within twenty-four (24) months from date of bank takeover.
4. Deposits in different banking institutions are insured separately. However, if a bank has one or more branches, the main office and all branch offices are considered as one bank. Thus, if you have deposits at the main office and at one or more branch offices of the same bank, the deposits are added together when determining deposit insurance coverage, the total of which shall not exceed P250,000.
Bank Deposit Insurance raised to 500,000
April 29, 2009. President Gloria Macapagal-Arroyo has signed amendments that will increase the insurance coverage for bank deposits by 100 percent. The insurance for bank deposits to be provided by the PDIC will be raised from PhP 250,000 to Php 500,000.
The amendment was done in order to strengthen the confidence in the Philippines' banking system. In order to encourage the people to keep their money in the banks and protect them during this global recession.
However, in a report from the Philippine Daily Inquirer, it also states that the amendment also "grants the deposit insurer which deposits should be insured and which should be not." Which begs the question, 'Which deposits are insured?' Are all our bank deposits insured by default or does it have to be approved by the PDIC first? If the deposit insurer (PDIC) can take away our bank deposit insurance anytime, somehow, I don't feel so secure anymore. I realize, of course, that they've added this to deter fraudulent schemes such as that of the Legacy Group. I think further explanations should be provided to add clarity to the subject. If the deposit insurance can only be taken away if fraudulent practice is proven to exist, then I guess that would be more acceptable. As to when this amendment will take into effect has not been announced yet. I checked the PDIC and still no news has been reported on the matter. (Haaay ... I miss Money Smarts already.)
I'll keep you guys updated on this matter once I have more news.
Secret No. 5: Protect Yourself (Retirement Funds) Part 2
This is part 2 of Secret no 5: Raising your Financial I.Q. from Bo Sanchez' 8 Secrets of the Truly Rich. In this section, we tackle issues about how to protect yourself and building your own retirement fund.
Protect Yourself Adequately
Most Filipinos are under-insured. Some don't even have insurance at all. We need to protect ourselves so that the family's we live behind will have sort of an "income replacement" when we die. Bo suggests that you insure yourself equivalent to 10 times your family's annual expenses. (Example: if your family spends P100,000 a year, you will need a P1 million insurance) This way your family can have more than enough time to look for a new income source. Better yet, they can be financially wise and invest the entire amount in a fund that earns 10% a year. This way, the P1 million will earn P100,000 a year which is the same amount your family was spending while you were alive. This way, they're provided for the rest of their lives!
Build Your Retirement Fund Now
Dying young can be a problem and it would be important to protect your family through insurance. However, living too long can also be a problem. In a survey on people above 65 years old, around 40% have to keep on working to survive, around 30% depend on their relatives to survive, around 8% depend on charitable institutions, and only 2% are financially independent. In order to protect yourself from living too long, you need to build your Retirement Fund now.
How to Build your Retirement Fund?
1. Automatically save 20% of your monthly income.
2. Invest as Early as You can.
The earlier you save, the more you'll have in the future.
(The power of compounding interest)
(The power of compounding interest)
3. Don't Put Your Retirement Fund in the Bank.
Instead Bo suggests that we all become Investors and put our long-term retirement funds in mutual funds, bond funds, equity funds and stocks. Although these instruments present more risk, investments put in these instruments in for the long-term have produced far greater yields compared to regular bank deposits.
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In the news: One Million Peso Deposit Insurance
In the news today (October 22, 2008), President Gloria Macapagal-Arroyo announces her support for a proposal to increase deposit insurance coverage from 250,000 pesos per depositor to 1,000,000 pesos!
I hope this pushes through! This can definitely boost up savings and time deposit accounts (^o^)v
By the way, the deposit insurance coverage is on a per bank per depositor basis and not on a per branch basis. So if you have multiple accounts in different branches of the same bank, technically, you are still only covered upto P250,000 (by PDIC). (Nothing still beats knowing the manager and the personnel in the banks.)
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