Our reporter in Malacanang, Joel Guinto, reported just now that President Gloria Macapagal-Arroyo has approved a move to raise deposit insurance coverage to P1 million from the current P250,000.
This would still require new legislation. If approved by both houses, this move will increase confidence in the banking system by time deposit-loving Filipinos.
Deposit insurance simply means if a bank goes pfft, you can still get your deposit up to P1 million from the Philippine Deposit Insurance Corp. There are, however, several common misconceptions about deposit insurance.
First, the guarantee works per bank, not per branch. I could hardly believe my ears when I found that some wealthy guys put P250,000 in one branch, then another P250,000 in another branch and so on, “to maximize the PDIC coverage.”
Splitting deposits that way will NOT protect you. If all deposits in the different branches are under one name, the insured amount is only up to P1 million (if the law gets approved). Right now, it’s still P250,000.
Second, deposit insurance should be a last resort for safety. Some depositors chasing after returns put their money in banks offering extremely high interest even if that’s often a sign that the bank is having cash problems. Their reasons? Deposits are covered by PDIC guarantee after all. Oh if they only saw the agony victims of bank closures go through, despite the assurance of a guarantee by the PDIC. Claiming the funds is not exactly a walk in the park.
Deposit insurance is not to be used as a guarantee for foolish behavior. When choosing banks, stability, capitalization and management values should be the paramount criteria and not just interest rates on deposits.
BREAKING NEWS: Increase in deposit insurance coverage to P1M
Our reporter in Malacanang, Joel Guinto, reported just now that President Gloria Macapagal-Arroyo has approved a move to raise deposit insurance coverage to P1 million from the current P250,000.
This would still require new legislation. If approved by both houses, this move will increase confidence in the banking system by time deposit-loving Filipinos.
Deposit insurance simply means if a bank goes pfft, you can still get your deposit up to P1 million from the Philippine Deposit Insurance Corp. There are, however, several common misconceptions about deposit insurance.
First, the guarantee works per bank, not per branch. I could hardly believe my ears when I found that some wealthy guys put P250,000 in one branch, then another P250,000 in another branch and so on, “to maximize the PDIC coverage.”
Splitting deposits that way will NOT protect you. If all deposits in the different branches are under one name, the insured amount is only up to P1 million (if the law gets approved). Right now, it’s still P250,000.
Second, deposit insurance should be a last resort for safety. Some depositors chasing after returns put their money in banks offering extremely high interest even if that’s often a sign that the bank is having cash problems. Their reasons? Deposits are covered by PDIC guarantee after all. Oh if they only saw the agony victims of bank closures go through, despite the assurance of a guarantee by the PDIC. Claiming the funds is not exactly a walk in the park.
Deposit insurance is not to be used as a guarantee for foolish behavior. When choosing banks, stability, capitalization and management values should be the paramount criteria and not just interest rates on deposits.
1 TrackBack
TrackBack URL: http://blogs.inquirer.net/cgi/mt/mt-tb.cgi/1454
Cooking frozen king crab legs.... Cooking frozen king crab legs....----- PING: TITLE: Cooking classes in boulder co. URL: http://f43pills.dogsblogusa.com/2009/11/18/cooking-classes-in-boulder-co/ DATE: 12/22/2009 01:34:44 PM IP: 127.0.0.1 Cooking classes in boulder co.... Cooking classes in boulder co....----- PING: TITLE: Cooking glossary com. URL: http://cookguru.blogguru.net/2009/11/23/cooking-glossary/ DATE: 12/22/2009 01:50:03 AM IP: 127.0.0.1 Cooking ingredients glossary vegetable oil.... Cooking glossary com. Asian cooking glossary....----- PING: TITLE: Cooking cabbage recipe. URL: http://cookkeep.blogs.keeptaperrelief.com/2009/11/20/cooking-cabbage/ DATE: 12/21/2009 04:56:25 AM IP: 127.0.0.1 Cooking cabbage recipe.... Cooking cabbage recipe....----- PING: TITLE: Cooking with mother goose. URL: http://f43pills.dogsblogusa.com/2009/11/18/cooking-with-mother-goose/ DATE: 12/21/2009 01:10:50 AM IP: 127.0.0.1 Cooking with mother goose.... Cooking with mother goose....----- PING: TITLE: Bbq cooking grids. URL: http://cookevent.blogs.event-management-uk.co.uk/2009/11/20/bbq-cooking-grids/ DATE: 12/19/2009 01:42:51 AM IP: 127.0.0.1 Cooking grids for bbq.... Bbq cooking grids....----- PING: TITLE: Pork loin cooking time. URL: http://f43pills.dogsblogusa.com/2009/11/18/pork-loin-cooking-time/ DATE: 12/17/2009 10:15:56 PM IP: 127.0.0.1 Smoker cooking pork loin time temperature.... Pork loin cooking time. Roast pork loin cooking time....----- PING: TITLE: Meat cooking times. URL: http://cookment.blogs.mentoring-uk.org.uk/2009/11/20/meat-cooking-times/ DATE: 12/16/2009 06:59:37 PM IP: 127.0.0.1 Meat cooking times.... Meat cooking times....----- PING: TITLE: Cooking in a smoker recipes. URL: http://cookevent.blogs.event-management-uk.co.uk/2009/11/20/smoker-cooking-recipes/ DATE: 12/16/2009 12:45:22 AM IP: 127.0.0.1 Cooking in a smoker recipes.... Cooking in a smoker recipes. Cooking on a smoker recipes....----- PING: TITLE: Cooking rice noodles. URL: http://f43pills.dogsblogusa.com/2009/11/18/cooking-rice-noodles/ DATE: 12/14/2009 03:50:34 PM IP: 127.0.0.1 Cooking rice noodles.... Cooking rice noodles....----- PING: TITLE: Cooking club. URL: http://f43pills.dogsblogusa.com/2009/11/18/cooking-club/ DATE: 12/12/2009 04:28:21 PM IP: 127.0.0.1 Kids cooking club.... The cooking club general store. Cooking club of america. Junior cooking club michigan. Cooking club. Kids cooking club....----- PING: TITLE: 22 inch cooking grate. URL: http://f43pills.dogsblogusa.com/2009/11/18/22-inch-cooking-grate/ DATE: 12/09/2009 01:02:05 PM IP: 127.0.0.1 22 inch cooking grate.... 22 inch cooking grate....----- PING: TITLE: Chemical reactions in cooking. URL: http://f43pills.dogsblogusa.com/2009/11/18/chemical-reactions-in-cooking/ DATE: 12/09/2009 12:56:30 AM IP: 127.0.0.1 Chemical reactions in cooking.... Chemical reactions in cooking....----- PING: TITLE: End of summer cooking. URL: http://cookevent.blogs.event-management-uk.co.uk/2009/11/20/end-of-summer-cooking/ DATE: 12/04/2009 02:04:51 AM IP: 127.0.0.1 End of summer cooking.... End of summer cooking....----- PING: TITLE: Cooking pork chops. URL: http://f43pills.dogsblogusa.com/2009/11/18/cooking-pork-chops/ DATE: 11/29/2009 06:09:56 PM IP: 85.17.145.7 Cooking pork chops.... Cooking stuff pork chops. Cooking pork chops. Cooking time baked pork chops....----- PING: TITLE: Cooking oil substitute yogurt. URL: http://f43pills.dogsblogusa.com/2009/11/18/cooking-oil-substitute-yogurt/ DATE: 11/25/2009 10:20:31 PM IP: 74.86.238.186 Cooking oil substitute yogurt.... Cooking oil substitute yogurt....----- PING: TITLE: Cooking glossary com. URL: http://f43pills.dogsblogusa.com/2009/11/18/cooking-glossary/ DATE: 11/25/2009 01:35:55 PM IP: 206.51.226.198 Cooking ingredients glossary vegetable oil.... Cooking ingredients glossary vegetable oil. Asian cooking glossary....----- PING: TITLE: Cooking wild goose. URL: http://cookkeep.blogs.keeptaperrelief.com/2009/11/20/cooking-wild-goose/ DATE: 11/25/2009 07:45:39 AM IP: 208.85.242.212 Cooking wild goose.... Cooking wild goose....----- PING: TITLE: Receipe for cooking ribs. URL: http://f43pills.dogsblogusa.com/2009/11/18/receipe-for-cooking-ribs/ DATE: 11/23/2009 02:08:33 AM IP: 85.17.145.7 Receipe for cooking ribs.... Receipe for cooking ribs....----- PING: TITLE: Pressure cooking chicken. URL: http://f43pills.dogsblogusa.com/2009/11/18/pressure-cooking-chicken/ DATE: 11/20/2009 08:41:17 PM IP: 195.47.247.158 Pressure cooking chicken.... Pressure cooking chicken....----- PING: TITLE: Cooking crawfish. URL: http://f43pills.dogsblogusa.com/2009/11/18/cooking-crawfish/ DATE: 11/20/2009 06:33:42 PM IP: 74.86.238.186 Cooking crawfish.... Cooking crawfish....----- PING: TITLE: Southern home cooking television shows. URL: http://f43pills.dogsblogusa.com/2009/11/18/cooking-shows/ DATE: 11/19/2009 11:51:25 PM IP: 74.86.238.186 Public televistion cooking shows.... Cooking television shows. Cooking shows chef....----- PING: TITLE: Financing solar cooking projects. URL: http://f43pills.dogsblogusa.com/2009/11/18/financing-solar-cooking-projects/ DATE: 11/19/2009 09:26:03 PM IP: 66.96.208.53 Financing solar cooking projects.... Financing solar cooking projects....----- PING: TITLE: Cooking class noosa. URL: http://f43pills.dogsblogusa.com/2009/11/18/cooking-class-noosa/ DATE: 11/19/2009 08:19:48 AM IP: 66.102.237.46 Cooking class noosa.... Cooking class noosa....----- PING: TITLE: Down home southern cooking. URL: http://756pills.iblog.my/2009/11/17/down-home-southern-cooking/ DATE: 11/18/2009 11:50:56 AM IP: 64.185.237.170 Down home southern cooking.... Down home southern cooking. How to cook southern cooking at home. Southern home cooking....----- PING: TITLE: Italian cooking schools. URL: http://756pills.iblog.my/2009/11/17/italian-cooking/ DATE: 11/18/2009 04:20:46 AM IP: 74.86.238.186 Italian cooking schools.... Italian cooking recipies. Italian cooking. Italian cooking dictionary. Italian cooking recipes. Cooking light italian dessert recipes....----- -------- Read More
salve,
to be fair to PDIC, it has been quick in processing claims: 1 to 2 weeks.
PDIC coverage increase - some kneejerk reaction to d financial crisis. It's been a measly P 100k from 80's till '06! Then it's tenfold w/in 2 yrs. Thanks to this crisis nagkaroon din ng saysay yang PDIC coverage na yan.
I think this is a good move on the part of PDIC and the President. For people who try to save as best as they can, this news is most welcome!
this is good news, if this pushes through.
I've always wondered why the insurance was only up to 250K, so that means that if your savings are above 250k, then it's probably better to use another bank for the rest, right?
mangyan, you're right, thanks for pointing that out. but also, for some people, one to two weeks can seem like eternity! and the inconvenience of waiting and lining up can be a harrowing experience. that said, it is still better to choose a bank based on stability, rather than an insurance coverage. :)
caroline, you are right on the money :-). unless you have absolute faith in the bank that it won't ever fall.
hi salve, mangyan,
can you please explain to us what needs to be done in that 1-2 weeks PDIC processing period aside from lining up?
Or people line up for 1-2 weeks?
This is certainly good news. I hope it is approved soon.
banking is indeed based on trust... am in both KBs and RBs. To be honest I bank on RBs because the money gets to be loaned out to the countryside and at the same time I get larger rates (at lease 10% p.a.) especially for longer terms and of course i bank on PDIC as well just in case... hence this news is positive to me and to all RBs-supporters.
expressing his own banking apetite
If you increase the PDIC coverage and depositors start to feel more secure, this CONFIDENCE is given to PDIC and not for the banking institution.
Depositors at rural banks would attest to this observation. They placed their money there despite having full knowledge that these are sickly, unstable and poor performing banks because of high interest rates and deposits are guaranteed by PDIC in case of bank closure.
Do you think these depositors trust and have confidence on Rural Banks ? I don't think so.
Raising the insurance limit to 500k is a good move for PDIC. Depositors would be encouraged to save more and not having to worry about not getting their money back.