Legislators want probe into plight of depositors in closed banks Created on April 21, 2014, 10:08 am Posted by nup

Partylist lawmaker Jesulito Manalo, along with three other congressmen, have sought an investigation into the plight of depositors of small banks ordered permanently closed by the Monetary Board in the past 16 years.

Manalo of the ANGKLA partylist, and fellow representatives Ronald Cosalan (lone district, Benguet), Arthur Defensor Jr. (3rd district, Iloilo) and Romero Quimbo (2nd district, Marikina City) filed House Resolution 869 asking the House Committee on Banks and Financial Intermediaries to hold an inquiry to find out how  the depositors in these banks can   be adequately protected.

ANGKLA is a partylist ally of the National Unity Party (NUP)  under the Coalition for Peace and Development.

According to the authors  of HR 869, the inquiry to be conducted in aid of legislation also aims to formulate the reforms  necessary to ensure that small banking clients  are provided adequate legal remedies to recover their deposits in the event of bank closures.

They pointed out that under  Section 30 of Republic Act 7653 or the New Central Bank Act, the depositors who have actual, substantial, material, direct and immediate legal interest in the continued operations of banks are deprived of judicial recourse because only the majority stockholders of the bank have the legal standing to question the orders and resolutions of the Monetary Board.

"The most adversely affected in this spate of bank closures are our constituents who entrusted their hard-earned money to the banks only to lose the same without any fault on their part," the authors said.

In the past 16 years, over 300 banks, mostly rural banks, thrift banks, savings banks and small commercial banks have been ordered permanently shut by the Monetary Board. The majority of the clients in these banks are small entrepreneurs, retirees, members of cooperatives and mutual fund associations who are bereft of legal remedies that will enable them to recover their deposits. 

“The depositors of these closed banks suffered substantial and irreparable economic damage as they could not recover their deposits in excess of the maximum deposit insurance coverage,” the authors noted.

The maximum deposit insurance coverage of the Philippine Deposit Insurance Corporation (PDIC) is only P500,000 per account.

They cited as an example  the recent closure of the Export and Industry Bank (EIB), where the depositors bonded together to seek measures to recover their deposits.

These clients,  however, found out that the legal remedies and protection under existing laws are inadequate to protect them,  despite the fact that a representative of the PDIC sits in the Board of Directors of EIB.

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