INSURED DEPOSIT

INSURED DEPOSIT is the net amount due to any depositor for deposits in an insured bank, after
deducting unpaid loans and other obligations of the depositor to the closed bank. In no case shall insured
deposit exceed P250,000 per depositor.

The deposit liabilities of any bank engaged in the business of receiving deposits are required to be insured with the PDIC. (Sec.4)

The PDIC becomes liable to pay the insured deposits in a bank when the bank is closed by the Monetary Board of the Bangko Sentral ng Pilipinas, that is, prohibited from doing further business in the Philippines, on
account of insolvency and other grounds under the law. (Sec. 10 [c])

The PDIC’s liability is up to P250,0000 per depositor / per capacity (before the amount of
insurance is up to P100,000 only).

The liability of the PDIC is on a per bank basis.

When an insured bank is closed on account of insolvency, the PDIC SHALL PAY EITHER:
1. In cash or
2. By making available to each depositor a transferred deposit in another insured bank
in an amount equal to the insured deposit of such depositor. (Sec. 10 [c])

TRANSFERRED DEPOSIT – a deposit in an insured bank made available to a depositor by the PDIC as payment of the insured deposit of such depositor in a closed bank and assumed by another insured bank. (Sec. 3 [h])

By paying its liabilities to depositors in this manner, the PDIC hopes to persuade these
depositors to keep their savings in banks where such funds could be lent out, rather than hoarded and kept out of the banking system.

If a depositor has several accounts with the bank, the liability of the PDIC will be calculated by adding together all deposits in the bank maintained by the depositor in the same capacity and the same right for his benefit either in his own name or in the name of others. (Sec. 3 [g])

PAYMENT to the depositor of his insured deposit:
1. Discharges the PDIC from any further liability to the depositor, and
2. Subrogates the PDIC to all the rights of the depositor against the closed bank to the
extent of such payment. (Secs. 10 [d] and 11 [a])

Every insured bank is required by the Act to display at each place of business maintained
by the bank a sign or signs stating that its deposits are insured by the PDIC. A similar
statement shall be included by the bank in its advertisements. (Sec. 16 [a])

Claim must be filed within 18 months from order of closure.

Note: The PDIC Act is not applicable to Offshore Banking Units