How safe is our money in the bank?

BY CHANCE I turned on my TV at a time when broadcaster Joel Reyes Zobel was commenting on the futility of saving substantial idle money in the bank, since its interest would not catch up with inflation – hence, a losing proposition.

I laughed, remembering his “surnamesake” Jaime, a banker who would certainly gain from deposits. Bankers make money by lending savers’ money to favored entrepreneurs and industrialists at higher interest rates!

But being in the same condition as Joel, I dread to think that the “dismal failure” of banks in the Philippines to attract depositors could be because regular savings accounts do not earn attractive interest. Based on figures gathered by the Bangko Sentral ng Pilipinas from all banks nationwide, only 10 million-plus Filipinos, or 10 percent of the Philippine population, have bank accounts.  

Most savings accounts from major banks in the Philippines grow at a measly rate of 0.10 percent to 0.50 percent per annum. Worse, accounts that fall below the bank’s required minimum deposit gradually “melt” because of penalty imposed. As if this were not bad enough, the earned interest also shrinks due to government-imposed withholding tax. 

I remember a tale shared to me by a cousin, for whose daughter she opened a “kiddie savings account.”  She deposited additional money into it month after month until it hit the P5,000 mark in one year.  Eventually she decided to withdraw the money due to an emergency. Imagine her dismay at discovering that the accrued interest could not cover her taxi fare.

So, better to invest in buy-and-sell, in a small sari-sari store or in lending to trustworthy relatives, friends and neighbors. It is not uncommon to see somebody stocking his refrigerator or freezer with soft drinks, ice or ice candy for sale. 

While it is easy to make a bank deposit, a withdrawal could be strenuous, as I found out in the case of a friend whose widowed mom with a substantial savings deposit had died intestate. The bank would not release to her and her siblings their mother’s money unless they could produce some required documents, including a deed of adjudication and its publication in a newspaper of general circulation thrice. Failure to comply would mean forfeiture of the claimed amount.

Low-income savers are more vulnerable to risks emanating from unexpected situations that require spending. I know of one – a retired government employee named Bernardita Lerio – whose ATM account suddenly “evaporated”.

To recall, on Aug. 9, 2015, Lerio tried to withdraw cash at the Landbank ATM (Plaza Libertad branch, Iloilo City). Instead of dispensing cash, however, the machine “ate” her card.  That day being a Sunday, there was no personnel except the security guard who asked her to come back “tomorrow na lang.”

When “tomorrow” came, she came back and got back her card. She inserted the card and tried to withdraw her expected balance of P26,000 but could not. To her horror, her balance had diminished to only P63.73 for no apparent reason.

The bank manager promised to probe the heist, but to no avail.    

Distrust in the banking system is probably the biggest reason why wage earners are cautious in keeping their eggs in one basket. It is no longer possible to count in one’s fingers the local banks that have folded up, leaving their depositors at the delayed mercy of the Philippine Deposit Insurance Corporation (PDIC), which could only refund claimants whose deposits do not exceed P500,000. If a depositor has more than that, sorry na lang. ([email protected]/PN)

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