Board of Directors Composition and Powers
- The Board consists of three members: the Governor of the Central Bank of the Philippines and two appointed Filipino citizens.
- One appointed member serves as full-time Chairman for six years; the other appointed member and the Governor receive per diem.
- Acting members fill vacancies temporarily.
- Board members cannot hold positions in insured banks during and for two years after their term unless a full term was served.
- The Board prepares rules, directs operations, appoints/removes officers, and authorizes expenditures.
Definitions and Scope
- Terms defined include Board of Directors, Bank or Banking Institution, receiver, insured bank, non-insured bank, deposit, insured deposit (up to P10,000), transfer deposit, and trust funds.
- Banks performing banking functions and receiving deposits in the Philippines are covered.
Eligibility and Application for Insurance
- Banks receiving deposits may insure liabilities upon Board approval based on examination.
- Board considers financial history, capital adequacy, earnings prospects, management character, community needs, and corporate powers.
Assessment Rate and Payment
- Assessment rates set by Board not to exceed 1/12 of 1% per annum.
- Semiannual assessments based on deposit liabilities, with allowable deductions as prescribed.
- Certified statements filed biannually by insured banks with penalties for non-compliance.
- Excess assessments may be refunded or credited.
- Delinquent payment may lead to status termination after notice.
- Trust funds insured separately with conditions on deposit reporting.
Termination of Insured Status
- Banks may terminate insurance with 90 days' notice.
- Board may terminate insurance for unsafe practices after Central Bank notice and hearing.
- Termination notices published and depositors informed.
- Insured deposits remain covered for two years post-termination for existing deposits only.
- Status terminates when liabilities assumed by other insured banks.
Corporate Powers of the Corporation
- Powers include adopting a seal, succession, contracting, suing or being sued, appointing employees, prescribing by-laws, making examinations, acting as receiver, and issuing regulations.
Administration and Examination
- Board administers fairly without discrimination.
- Free use of Philippine mails.
- Appointment of examiners and claim agents with authority to investigate.
- Banks must report condition; failure penalized.
- Confidentiality of bank information is mandatory.
Insurance Fund and Payments in Case of Insolvency
- A permanent insurance fund of P5,000,000 is created.
- Maximum insured deposit per depositor is P10,000.
- Payment to depositors can be in cash or transferred deposits.
- Proof of claims may be required.
- Corporation subrogated to depositor’s rights against closed bank.
Discharge and Claims Handling
- Payment by Corporation discharges liability to extent of payment.
- The Corporation need not recognize unrecorded owners that increase aggregate insured deposits.
- Payment withheld to cover depositor liabilities to the bank.
- Unclaimed deposits barred after 18 months post asset conversion order.
Investment and Financial Operations
- Funds invested in Philippine obligations with limits on transactions requiring Insurance Commissioner approval.
- Banking accounts maintained with designated government banks.
- Corporation authorized to support banks in danger of closing through loans or asset purchases.
Borrowing Authority
- Corporation may borrow up to P100 million from Central Bank at stipulated interest rates for insurance purposes only.
Tax Exemption
- Notes, debentures, bonds or obligations issued by Corporation are tax-exempt.
Reporting and Auditing
- Annual report to Congress required.
- Audits by General Auditing Office with full access to financial records.
- Audit report includes financial statements and may highlight unauthorized financial activities.
Advertisement and Deposit Insurance Disclosure
- Insured banks must display signs and include insurance statements in advertisements.
- Penalties imposed for non-compliance.
- Restrictions on dividends and distributions if assessments are unpaid.
- Mergers or transactions with non-insured banks restricted without Corporation consent.
- Mandatory indemnity insurance may be required.
Eligibility Restrictions for Bank Personnel
- Persons convicted of dishonesty or breach of trust barred from serving as directors, officers, or employees.
- Penalties for violations imposed.
Separability and Repealing Clauses
- Invalidity of any provision does not affect others.
- Inconsistent previous laws, orders repealed.
Effectivity
- Act takes effect upon approval and operational commencement upon Board organization and fund appropriation certification.