PDIC proposes risk-based assessment for banks

The Philippine Deposit Insurance Corporation (PDIC) is proposing a new risk-based assessment system to discourage banks from engaging in risky lending practices, especially after the recent increase in the maximum deposit insurance coverage (MDIC).

Currently, all banks pay a flat rate assessment of one-fifth of 1% of their total deposit liabilities, but the proposed system would adjust premiums based on the level of risk each bank undertakes.

PDIC President and CEO Roberto B. Tan explained that the new system aims to incentivize prudent banking practices by potentially levying higher fees on riskier institutions.

This initiative is part of a study being conducted by PDIC in collaboration with the Bangko Sentral ng Pilipinas and the World Bank, with findings expected to be presented to Congress.

The study, which began in 2022 and was initially slated for completion in 2027, could potentially be finalized within the current year.

The goal is to encourage banks to improve their operations, management, capital, and governance to maintain a sound financial standing.