PDIC Rules on Bank Examination

The issuance is promulgated pursuant to Section 8 of Republic Act No. 3591, as amended by Republic Act No. 9576.
PDIC is tasked to promote and safeguard the interests of the depositing public through permanent and continuing insurance coverage on all insured deposits.
PDIC must help develop a sound and stable banking system at all times.
PDIC shall conduct bank examinations in close coordination with the Bangko Sentral ng Pilipinas (BSP) to determine banks’ overall financial condition and compliance with banking rules and regulations.
Examination efforts must maximize the efficient use of BSP reports, information, and findings, which BSP shall make available to PDIC to avoid overlapping.

A Regular Examination is conducted independently or jointly with the BSP.
A Regular Examination requires prior approval of both the PDIC Board of Directors and the Monetary Board (MB).
A Regular Examination may be conducted only after an interval of at least twelve (12) months from the closing date of the last Regular Examination.
A Special Examination is conducted at any time in coordination with the BSP.
A Special Examination requires an affirmative vote of a majority of all members of the PDIC Board of Directors.
A Special Examination does not require prior MB approval when there is a threatened or impending bank closure, as determined by the PDIC Board of Directors.

Examinations include determining a bank’s solvency and liquidity position.
Examinations include evaluating asset quality and determining the sufficiency of valuation reserves on loans and other risk assets.
Examinations include reviewing all aspects of bank operations.
Examinations include assessing the risk management system, including evaluating the effectiveness of management’s oversight functions, policies, procedures, internal control and audit.
Examinations include appraising the bank’s overall management.
Examinations include reviewing compliance with applicable banking laws, including rules and regulations, and PDIC issuances.
Examinations include follow-through of specific exceptions/violations noted during a previous examination.
Examinations include any other activity relevant to the matters above.

PDIC examiners may conduct Regular or Special Examination of banks on behalf of PDIC, whether independently or jointly with BSP.
Examiners are authorized to make a thorough examination of all the affairs of the bank.
Examiners are authorized to administer oaths and examine, take and preserve the testimony of bank officers and agents.
Examiners are authorized to compel the presentation and/or submission of books, documents, or records necessary to ascertain facts about the bank’s condition.
Examiners are authorized to inquire into or examine deposit accounts and related information when there is a finding of unsafe and unsound banking practice:
- under a previous BSP examination, or
- during an ongoing PDIC examination.
Examiners are authorized to make a full and detailed report of the bank’s condition to the PDIC Board.

Examiners must give the bank a copy of the examination findings.
The bank may respond to the findings during the exit conference.
The bank must submit written comments within ten (10) calendar days after the exit conference.
Examiners must submit the examination findings and the bank’s comments to the PDIC Board for appropriate action.
For joint examinations, the findings and comments must be further submitted to the BSP.
PDIC Board action on PDIC findings involving violation and/or compliance with PDIC issuances, rules and regulations is independent.

PDIC may inquire into or examine deposit accounts and all information and documents related thereto.
Deposit-account examination is allowed when PDIC or BSP finds unsafe or unsound banking practice in accordance with BSP Circular 341, series of 2002, as amended by BSP Circular No. 640, series of 2009.
Deposit-account examination is also allowed for other banking activities that the PDIC Board, through an appropriate resolution or regulation, determines to be unsafe or unsound banking practice.

A penalty of prision mayor or a fine of not less than PHP 50,000 but not more than PHP 2,000,000, or both, at the discretion of the court, is imposed under Section 21 (f) of the PDIC Charter.
The penalty applies to any responsible director, officer, employee or agent of bank for:
- willful refusal to submit reports required by law, rules and regulations;
- unjustified refusal to permit examination and/or audit of the bank’s affairs;
- willful making of a false statement or entry in any bank report or document submitted to PDIC; and
- willful failure or refusal to comply with, or violation of, any provision of the PDIC Charter, and/or conducting business in an unsafe and unsound manner as may be determined by the PDIC Board.
Administrative fines against the bank and its responsible directors, officers, employees, or agents may also be imposed by the PDIC Board of Directors under Section 21 (g) of the PDIC Charter and its implementing regulatory issuance.

All other related PDIC rules and/or regulations inconsistent with the issuance are repealed or amended accordingly.