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House OKs bill hiking maximum deposit insurance coverage


MANILA, Philippines - The House of Representatives on Monday unanimously approved on third reading a bill increasing the maximum deposit insurance coverage from P250,000 to P500,000 per depositor. With 172 lawmakers voting in favor of the bill's passage and with neither negative votes nor abstentions, the House managed to pass the measure before Congress session goes into recess starting March 7. Manila Rep. Jaime Lopez, chairman of the Committee on Banks and Financial Intermediaries, described the bill as "intended to build up up public trust and confidence in the strength of the banking system as a preemptive, proactive measure to avert the impact of the worsening global financial crisis now steadily creeping into our region." House Bill 5911 was primarily authored by Speaker Prospero Nograles. In order to allow the Philippine Deposit Insurance Corporation (PDIC) to sustain the increase in the maximum deposit insurance coverage, the bill provides that the government will have a share in the insurance coverage for the first three years. The first P250,000 will be undertaken by the PDIC, while the remaining P250,000 will be advanced by the agency but will be shouldered by the national government. The PDIC will then reimburse the amount through Congress appropriation, Lopez said. Lopez said the measure likewise provides the PDIC with tax subsidies such that all PDIC tax obligations would be chargeable to the tax expenditure fund for five years from the law's effectivity. After the initial five-year period, the PDIC will be exempt from income tax, final withholding tax, and value added tax on assessments collected from member banks. "If this global economic meltdown deteriorates further and intrudes into our banking system, the stability of out financial system might be shaken. Hence, the need for a preempted, pro-active measure such as the action being taken by Congress," Lopez said. - Johanna Camille Sisante, GMANews.TV
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