The Philippine Deposit Insurance Corp. (PDIC) is considering adopting new rules to prevent persons or entities from splitting their deposits into two or more accounts in order to increase their insurance coverage.

According to PDIC president Jose Nograles, the state deposit insurer is studying the inclusion of sworn statements in claim forms for deposit insurance to make any holder of a dummy account criminally liable for any misrepresentation concerning a deposit insurance claim.

He said PDIC will also adopt payment of valid claims through registered mail.

"This is to ascertain that only valid deposit insurance claims are paid. Mailing the checks to claimants on record will also make it difficult for a depositor of split accounts to control receipt of the payments by their dummies," Nograles said.

Nograles explained that new rules against deposit-splitting is necessary to protect PDIC's deposit insurance fund, where payments for valid claims are sourced.

PDIC said people usually resort to deposit-splitting when they put their money in risky instruments masquerading as deposits. Instead of bearing the higher risk associated with higher interest, the PDIC said these people split their deposits so that each account will be well within the PDIC's maximum deposit insurance coverage of P500,000.

Deposit-splitting was one of the dirty schemes employed by the collapsed Legacy group of rural banks.

Of the estimated P14 billion insured deposits in the Legacy banks, the PDIC found P6 billion worth of deposit accounts "doubtful" due to incomplete documents and suspicious transactions.

Under Republic Act 9576, the PDIC is granted institutional strengthening powers to deal with risks associated with higher deposit insurance coverage, which includes the imposition of more stringent rules on splitting of accounts. The new law prohibits the splitting of deposits within 120 days from the declaration of a bank holiday.

Previously, deposit splitting is only prohibited within 30 days from bank closure. "The longer window set by law along with the new rules will help ensure that benefits of deposit insurance are not abused," Nograles said.