FIN 100: Philippine Deposit Insurance Corporation

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Questions and Answers

What happens to the excess amount of a deposit claim over P500,000 in a closed bank?

It is transferred to a government fund.

It is automatically insured by PDIC.

It is a claim against the assets of the closed bank. (correct)

It cannot be claimed at all.

Which of the following is NOT a primary function of insurance?

Facilitating investment (correct)

Providing protection

Providing certainty

Risk-sharing

How long does a claimant have to file a claim against the excess uninsured deposit in a closed bank after the notice of closure?

60 days (correct)

120 days

90 days

30 days

What primarily dictates the length of the pre-settlement examination period by PDIC?

The completeness and accuracy of records Signup and view all the answers

What type of insurance primarily covers property loss and liability?

Non-life insurance Signup and view all the answers

In what circumstance can the six-month period for servicing claims by PDIC be skipped?

If the documents are incomplete Signup and view all the answers

What is a key feature of a life insurance policy?

A lump-sum payment to beneficiaries upon death Signup and view all the answers

Which term best describes the process through which insurance spreads risk among many policyholders?

Risk pooling Signup and view all the answers

Which of the following types of accounts does PDIC not insure?

Investment products such as bonds and trust accounts Signup and view all the answers

What is the nature of membership in PDIC for banks operating in the Philippines?

Mandatory for all operating banks Signup and view all the answers

Which of the following is not covered under PDIC's deposit insurance?

Funds from investment accounts Signup and view all the answers

How are foreign currency deposits treated under PDIC insurance regulations?

Insured under specific provisions Signup and view all the answers

What is a significant exclusion from deposit insurance according to RA 9576?

Fictitious or improper deposit accounts Signup and view all the answers

Deposits that are proceeds of unlawful activities are treated how by PDIC?

Excluded from insurance coverage Signup and view all the answers

Which banking entities are eligible for PDIC deposit insurance?

All operating banks in the Philippines Signup and view all the answers

What requirement must a bank meet to have its deposit obligations at a branch outside the Philippines insured by PDIC?

Approval from the Board of Directors of PDIC Signup and view all the answers

What is one of the primary functions of pawnshops as stated in the presidential decree?

To require reports of condition Signup and view all the answers

Which retirement program allows a government employee to receive a five-year lump sum or cash payment?

Retirement under Republic Act 8291 Signup and view all the answers

What benefit does the Enhanced Life Policy provide to GSIS members?

Immediate life insurance coverage upon starting government service Signup and view all the answers

Which of the following retirement options is commonly known as 'Magic 87'?

Retirement under Republic Act 660 Signup and view all the answers

What administrative action can be taken against pawnshops for non-compliance with the provisions?

Imposing fines and administrative sanctions Signup and view all the answers

What choice does the Retirement under Presidential Act 1146 offer to eligible government workers?

Basic Monthly Pension or Cash Payment Signup and view all the answers

What does the Life Endowment Policy provide for GSIS members?

Coverage against death and other benefits at maturity Signup and view all the answers

What is the Portability Law (R.A 7699) designed to accomplish?

Allow combining service years from GSIS and SSS Signup and view all the answers

What is the penalty for agencies that fail to remit uncollected amounts to GSIS?

Interest of not less than 2% per month on unremitted collections Signup and view all the answers

What may happen to the head of the agency if they fail to remit loan amortizations?

They will face administrative and criminal charges Signup and view all the answers

What will happen to the annual dividend privileges of a member who has unpaid loans?

They will be cancelled Signup and view all the answers

How is the separation benefit calculated for members with less than 3 years of service?

No benefits are provided Signup and view all the answers

What will be deducted from the proceeds of a member's loans or claims if they have unpaid loans?

All unpaid loans, interests, and surcharges Signup and view all the answers

What is the benefit duration for members who have contributed for more than 1 year but less than 3 years?

2 months Signup and view all the answers

At what age is a lifetime old-age pension benefit payable to members with at least 15 years of service?

60 years old Signup and view all the answers

What is the penalty for officials convicted of failing to remit loan amortizations?

Imprisonment from 1 to 5 years and a fine of P10,000.00 to P20,000.00 Signup and view all the answers

What is necessary for a Sickness Income Benefit to be approved?

Sickness must be linked to an occupational disease. Signup and view all the answers

What determines the Termination Value of an Enhanced Endowment Policy (ELP)?

The percentage of life insurance premiums remitted to GSIS. Signup and view all the answers

How is the Death Benefit for Enhanced Endowment Policy calculated?

It is equivalent to the latest annual salary multiplied by 1.5. Signup and view all the answers

Which document is NOT required for the Auto Shield Car Insurance application?

A letter of consent from the policyholder's spouse. Signup and view all the answers

Which of the following benefits is considered not guaranteed for policyholders?

Annual Dividend subject to GSIS guidelines. Signup and view all the answers

What document is required to establish proof of relationship for GSIS benefits?

Marriage Certificate. Signup and view all the answers

What must be considered when filing a claim for Accidental Death Benefit (ADB)?

Proof of accidental death must be submitted. Signup and view all the answers

What is the main purpose of the Consolidated Loan?

To consolidate multiple loans into one. Signup and view all the answers

What is one primary function of insurance in a company?

To make provisions for unforeseen circumstances Signup and view all the answers

Which of the following is NOT a step to invest wisely?

Invest only through unlicensed intermediaries Signup and view all the answers

Which type of asset does a Fixed Deposit represent?

Financial asset Signup and view all the answers

What is a common reason for investing early?

To benefit from compound growth over time Signup and view all the answers

Which of the following factors does NOT influence interest rates?

Personal credit scores Signup and view all the answers

What is a characteristic of a long-term investment strategy?

Regular and early investing Signup and view all the answers

Which of the following is considered a short-term financial investment option?

Fixed Deposits Signup and view all the answers

What should an investor assess regarding their investment?

The risk-return profile of the investment Signup and view all the answers

Study Notes

Reporting Materials for FIN 100

Course covers Philippine Deposit Insurance Corporation (PDIC)
Objectives: Students will explain the importance and role of PDIC in the banking system.
To-Do List: Students must participate in discussions, follow online etiquette, and submit required module outputs by the deadline.

Philippine Deposit Insurance Corporation (PDIC)

History mirrors the US Federal Deposit Insurance Corporation (FDIC)
PDIC was formed due to bank runs caused by withdrawals from failed banks.
Solutions focused on the deposit insurance principle
Banking Act of 1933 (US) created FDIC.
FDIC set a national deposit insurance limit of $2,500 per depositor.
Thirty years after, the Philippines faced a similar banking crisis,
PDIC was formed on June 22, 1963 (Republic Act 3591) to stabilize the banking situation
PDIC leadership stressed protecting unsophisticated depositors.
Confidence is essential for a stable financial system.
1968: PDIC began operations with a Php5 million insured fund.
Membership later became mandatory.
Maximum deposit insurance coverage increased over time.

Frequently Asked Questions (FAQ)

PDIC is a government agency to insure bank deposits (RA 3591).
Latest amendments (RA 10846) grant PDIC stronger authorities.
PDIC now more efficiently resolves issues with closed banks.
PDIC helps depositors who are impacted by bank closures
PDIC is attached to the Department of Finance.
PDIC's mandate is to help maintain public confidence in the economy by ensuring prompt payment of insured deposits, exercising bank supervision, and efficiently managing bank receiverships and liquidations.
Functions include deposit insurer, co-regulator of banks, and receiver/liquidator of closed banks.

Maximum Deposit Insurance Coverage

Effective June 1, 2009: Php500,000 per depositor, totaling from all accounts in the same name.
PDIC can adjust maximum coverage if necessary, given approval.

Insured Deposits

Insured deposits refer to the amount owed to depositors minus any obligations, not exceeding Php500,000.
Joint accounts are separately insured.
Certain types of accounts are typically excluded:
- Investment products (like bonds)
- Unfunded accounts
- Fraudulent accounts
- Accounts emanating from unsafe/unsound banking.
- Illegal activity as per Anti-Money Laundering Law
All operating banks must be PDIC members.

Non-Banking Institutions/Insurance Companies

Life insurance is a contract, with premiums in exchange for a lump-sum if the insured dies.
Non-life insurance protects against losses/damages (including property) outside of death.
Insurance functions primarily deal with providing certainty in uncertain situations, and risk-sharing.

Bancassurance

Partnership between banks and insurance companies for selling insurance products.
Insurance sold within bank premises to customers.
Regulation requires a distinct area for insurance sales.
Banks are not required to own insurance companies.
Insurance companies must be licensed by Insurance Commission and regulated under RA10607

Insurance Commission (IC)

The IC is a government agency under the Department of Finance.
The IC regulates the operations of several companies.

Pawnshops

A special type of lender that offers loans secured by personal property as collateral.
The law (PD 114) ensures stability and public safeguard in operations.
Pawnshops handle loans to individuals for specified periods from a pool of capital.
PD 114 governs financial stability of pawnshops and ensures fairness to the borrowers.

GSIS and SSS

Government insurance institution, primarily for government employees.
Offers life insurance, retirement benefits, and disability programs.
Multiple retirement programs are available to members.
Employee compensation is part of the services.
GSIS and SSS provide various benefits, including insurance, retirement schemes, and disability payments for work-related issues.

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Description

This quiz explores the role and significance of the Philippine Deposit Insurance Corporation (PDIC) in the banking system. Students will delve into its history, formation, and the importance of deposit insurance in promoting financial stability. Engage with the content to understand the impact of PDIC on depositors and the banking sector.