INCREASING THE maximum deposit insurance for bank clients will benefit lenders and help them ride out the coronavirus pandemic, lawmakers said.

“The higher insurance coverage, the better. But it is something that has to be balanced with what the industry is willing to pay,” Chairperson for the House Committee on Banks and Financial Intermediaries and Quirino Representative Junie E. Cua said in a phone call.

Earlier this month, Chamber of Thrift Banks (CTB) Second Vice- President Francisco A. Dizon asked Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno in a CTB event about the possibility of a higher maximum deposit insurance coverage (MDIC) worth P750,000 to P1 million from the current P500,000. Mr. Diokno vowed to bring the matter to the Philippine Deposit Insurance Corp. (PDIC).

CTB Executive Director Suzanne I. Felix said there will be further discussions on the issue next month.

Marikina Representative Stella Luz A. Quimbo said she fully supports the idea as it will benefit both banks and their clients.

“Risk aversion among depositors increases during an economic downturn, hence the increased demand for deposit insurance,” Ms. Quimbo, who is also a member of the House Committee on Banks and Financial Intermediaries, said in a text message.

“Expanded insurance coverage is needed to encourage deposits, considering that savings have actually increased during the pandemic,” she added, noting a move to raise the MDIC will be a form of economic stimulus.

Mr. Diokno earlier said total deposits inched up 3% to P14.3 trillion as of end-July as Filipinos choose to set aside money amid the continued uncertainty caused by the coronavirus disease 2019.

He said he does not expect the trend to continue as consumption is likely to recover as things normalize.

Mr. Cua said they are working on a briefing to gauge the resilience of the banking industry during the pandemic with the BSP, PDIC, as well as banking groups. He said it could also be a venue where they could discuss the possibility of a higher MDIC.

The PDIC in an e-mailed response to questions reiterated the need for legislation amending its charter to raise the deposit insurance.

“The continuing review of the MDIC considers availability of more recent data and other relevant factors. At this point, any increase in MDIC should be strongly justified including serious consideration for cost and benefit to all stakeholders including regulators, banks and depositors,” the PDIC Corporate Affairs Group Jose G. Villaret, Jr. said.

The MDIC was adjusted to P500,000 in 2009 from P250,000 previously. — L.W.T. Noble