| Your Money in the Bank: Covered by Insurance? |
|
|
|
A bank run (also known as a run on the bank) is a type of financial crisis. It is a panic which occurs when a large number of customers of a bank fear it is insolvent and withdraw their deposits. You may still remember the bank run suffered by Urban Bank some years back, an unfortunate event from which the bank wasn't able to recover. It's also a rude awakening that even big banks suffer a financial crisis which adversely affects its depositors.
If that level of financial crisis could hit big banks, it could definitely hit smaller banks. Only a month or two ago, the Philippine Deposit Insurance Corporation (PDIC) announced that the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) placed the Sandigan Savings Bank, Inc. under receivership. The PDIC, as the Receiver, took over Sandigan Savings Bank and its branches, assets, records and affairs on 24 August 2007. The PDIC also took over Rural Bank of Sebaste (Antique), Inc. (RBSI) and Maranao Rural Bank, Inc. (MRBI), both of which were also ordered closed by the BSP. In light of these closures, let's discuss the insurance coverage of your money in the bank. The PDIC is the government agency that provides for insurance of bank deposits. Since all operating banks are required to be members of PDIC, deposits in all banks are covered by insurance. All peso and foreign currency savings deposit accounts, time deposit accounts, current or demand deposit or checking accounts in a bank are insured with PDIC. If deposits are covered by insurance, then there's no need to worry, right? Well, not really. First, the insurance coverage is based on the net amount, after deducting withholding taxes and the depositor's unpaid loans and other obligations, if any, to the bank. Second, if you have millions of deposit with a bank, not all of the amount is covered by insurance. The maximum deposit insurance coverage is only P250,000. This is the maximum coverage for each depositor, and all deposit accounts by a depositor in the same right and capacity are be added together. It doesn't really make a difference if you have two accounts, perhaps a dollar account and a peso account, or a savings account and a time deposit account. Third, the insurance covers "deposits". This includes, as noted above, peso and foreign currency savings deposit accounts, time deposit accounts, and current or demand deposit or checking accounts. On the other hand, investments like a Unit Investment Trust Fund or UITF (an open-end trust fund), is NOT considered as a deposit and is, therefore, NOT covered by PDIC insurance. Still, this discussion should not deter you from supporting the "Mag-impok sa Bangko" campaign. Savings are equally important as investments in the life of the Pinoy Entrepreneur. By the way, you could also read the PDIC's Frequently Aked Questions (FAQ).
|
No comment yet
Newer posts:
- Basic Reminders to Prevent Check Fraud --
- Trading down in a slowing economy --
- Jeepney Fare back to P7.50 minimum by November 2 --
- Stronger Peso ahead: P42.50:$1 at year-end --
- Credit Cards and Access Devices Regulation: Explained --
Older posts:
- Regulating the Business of Lending (Part 2) --
- Regulating the Business of Lending (Part I) --
- The Truth in Lending Act explained --
- Insolvency and Criminal Cases --
- Personal Finance: Pay Yourself First --
| < Prev |
|---|