PHL insurance rates are included in international rates even after remittance of inactive funds to BTr

The country’s deposit insurance standards are in line with international standards even after the Philippine Deposit Insurance Corp. (PDIC) released its non-performing funds from the Bureau of the Treasury (BTr) to support government-wide efforts to develop the economy through national government funding. important projects.

“We assure the public that after the remittance, the Deposit Insurance Fund (DIF) of the PDIC remains sufficient to cover the risks in the banking system and that the PDIC can still deliver its services effectively, in the event of insurance calls,” the PDIC. Said President Roberto B. Tan.

“DIF continues to be maintained within the target level set by its Board of Directors based on international best practices,” he added.

The PDIC disbursed P107.23 billion in compliance with Congressional mandate under the General Appropriations Act of 2024 and in strict accordance with the opinion given by the Office of the Corporate Government Counsel (OGCC).

PDIC’s billion-peso remittances to the national government go to projects aimed at promoting economic activities, which are expected to lead to higher investment in banks and the growth of financial institutions to provide more financial products and services to Filipinos nationwide.

This includes major infrastructure and social programs such as maintenance, repair, and rehabilitation of major infrastructure buildings; Individual and Family Crisis Protection Services/Disaster Assistance; Philippine Food Stamp Program; and various projects to advance the government’s disaster-related infrastructure projects; and efforts to electrify rural areas through Financial Support for the Purchase of Photovoltaic Mainstreaming (Solar Home Program).

Additionally, unspent funds were used to finance counterparts in foreign-aided projects, including the Panay-Guimaras-Negros Island Bridges; the Metro Manila Subway project; the Philippine Multi-Sectoral Nutrition Project; the Mindanao Inclusive Agriculture Development Project; the Cebu-Mactan Bridge and Coastal Road Construction Project; North-South Passenger Rail System; Support for Land Division in Individual Titling Project; the Project to Improve the Success and Skills of Teachers; and the Philippine Fisheries and Coastal Resiliency Project, among others.

These projects are expected to drive economic growth by creating jobs, increasing incomes and reducing poverty, thus creating positive social multipliers.

Following the remittance of P107.23 billion to the national government, the DIF now stands at P202.85 billion, or 5.8% of the country’s gross insured income. The target grade ratio set by the PDIC Board is from 5% to 8%.

The International Association of Deposit Insurers (IADI) recommends that most jurisdictions set a target reserve ratio of between 2% and 5% of insured deposits, although targets may vary based on the risk and banking environment of the country.

For example, the United States target reserve ratio for their DIF is 2% of insured deposits, while in Canada the target is usually around 1.05% of insured deposits.

IADI is a global standard setting body dedicated to improving the efficiency of deposit insurance systems worldwide. Founded in 2002 and based at the Bank for International Settlements in Basel, Switzerland, the organization promotes financial stability by promoting international standards and providing guidance on deposit insurance practices.

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