Bankers seek change in PDIC rules

[Balita News Services]

CEBU CITY, July 8(PNA)-- Depositors can sleep soundly with their
money in the bank because measures are being proposed to protect them,
according to an economist.

During a recent business forum for media practitioners
nationwide, Dr. Johnny Ravalo, chief economist and director of the
Bankers Association of the Philippines, said the BAP was proposing a
graduated scale of Philippine Deposit Insurance Corp PDIC) coverage for
depositors.

"We propose a graduated scale of 100 percent for so much in
deposits, 80 percent for so much, 60 percent for so much," Ravalo said.

At present, when a bank closes, each depositor is entitled to
get only up to P100,000 from the PDIC.

Last April, the commercial banking system posted a 14.48 percent
non-performing loan ratio, up from 13.2 percent in March and 12.87
percent in February.

This has given some depositors the jitters.

The experience of the failed Orient Bank, which was sunk by huge
loans to its own directors, officers, stockholders and related
interests, has not helped to calm their fears.

But Ravalo revealed that a Banking Act amendment is now pending
in Congress which allows the Bangko Sentral ng Pilipinas "to impose the
fit and proper rule."

This means the BSP "can dictate whether a senior officer of a
bank is good enough to be a senior officer, as well as his salary,
education, etc.," he said.

On complaints raised about the savings of depositors in the
provinces being brought to Manila and other urban areas for lending to
big firms, Ravalo said banks were just trying to channel the funds where
they were needed.

It has something to do with culture, he said.

"For example, Ilocanos save well, but they don't borrow.

In Cebu, the investment rate is much higher than the savings
rate. We need (to get) money from other areas because they can't fund
their investments themselves," he said.(PNA) JV/EB/FCE/ad/utb

PNA 07081337