SINGAPORE: The Monetary Authority of Singapore (MAS) is proposing to increase coverage of the deposit insurance scheme from S$75,000 (US$55,630) to S$100,000.
MAS on Tuesday (Jun 27) published a public consultation paper on the proposals to increase the insurance coverage per depositor, and to improve the clarity and operational efficiency of the scheme.
The scheme, administered by the Singapore Deposit Insurance Corporation (SDIC), insures Singapore-dollar deposits held at a full bank or finance company in Singapore. All full banks and finance companies in Singapore are members of the scheme, except those exempted by MAS.
Under the current coverage, the SDIC will pay out up to S$75,000 per depositor per institution in the event that a bank or finance company in the scheme goes under.
“The proposed increase will ensure that the vast majority of smaller depositors continue to be fully covered, keeping pace with the growth in average deposit balances,” MAS said.
This change will result in 91 per cent of depositors being fully covered by the deposit insurance scheme and will ensure that it “continues to fulfil its primary objective of protecting small depositors in the event of a bank failure”, the authority added.
About 89 per cent of depositors in Singapore are fully insured under the scheme, said Minister of State for Trade and Industry Alvin Tan in May in response to parliamentary questions.
The coverage limit was last raised in 2019 from S$50,000 to S$75,000, fully insuring about 91 per cent of depositors at that time. The percentage of fully-insured depositors has since fallen slightly amid deposit growth, Mr Tan said.
“This level of deposit insurance coverage strikes the appropriate balance between achieving a high degree of coverage for depositors and managing the cost of the coverage which, if too high, will ultimately be passed on to customers,” said MAS on Tuesday.
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