The Bangko Sentral ng Pilipinas (BSP) is supporting proposed measures that will attach both the Philippine Deposit Insurance Corp. (PDIC) and Insurance Commission (IC) to the central bank, making the independent institution a super regulator similar to the Monetary Authority of Singapore and Bank Negara Malaysia.
“The BSP is opened to the proposed measures (of transferring IC to the BSP) as the arrangement will foster closer coordination with the financial services regulators and ultimately may help promote price stability and maintain financial stability in the country,” said BSP Governor Benjamin E. Diokno on Wednesday, in an online press chat.
Currently, both PDIC which is BSP’s co-regulator of banks, and the IC are attached agencies of the Department of Finance.
“We understand the objective of the proposed measure to reorganize the IC into a collegial body under BSP supervision to enhance the regulation and supervision of the insurance, pre-need, and health maintenance organization industries in order to protect the public and create an environment that is conducive to these industries’ continued robust growth,” said Diokno.
House Bill No. 6162, “An Act Reorganizing and Converting the Insurance Commission into a Collegial Body” and amending three sections of the Insurance Code (Republic Act No. 10607) was filed last February 2020 while HB No. 6292 was also filed on the same month. The bills’ last movement was on June 3, 2020 which was the day it was received by the Senate.
As for the PDIC Charter amendments, HB No. 8818 has been approved on third and final reading last March 25 while Senate Bill No. 2365 was filed last August 25 to substitute Senate Bill Nos. 2089 and 1260.
Diokno said he supports the passage of a new PDIC law with provisions that would increase the maximum deposit insurance coverage to an amount indexed to inflation or in consideration of other economic factors.
Under HB No. 8818 and SB No. 2365, the proposal is to retain the maximum insurance coverage at P500,000 but will grant PDIC Board the authority to increase the amount. Diokno said the BSP supports adjustments to the insurance coverage but will defer to PDIC if it should be pegged at P1 million or a lower amount, based on the PDIC study.
“We believe that this will give PDIC the flexibility to implement its mandate as the country’s deposit insurer. More importantly, this will provide additional safeguard to the depositing public,” said Diokno.
When PDIC is attached to the BSP, the BSP governor will become an ex-officio chairperson of the PDIC Board. The move will also pave the way for the consolidation of certain powers of the PDIC to BSP. “This will prevent overlapping functions that should be with BSP as the primary regulator of banks,” said Diokno.