MAS to increase insurance coverage on bank deposits to S$100,000 per customer from April 2024

SINGAPORE: Insurance coverage on bank deposits will be raised from SS$75,000 (US$54,900) to S$100,000 per customer from Apr 1, 2024, the Monetary Authority of Singapore said on Friday (Sep 22).

The increase will restore the percentage of fully covered insured depositors to 91 per cent. It has fallen to 89 per cent since the last increase in 2019 from S$50,000 to S$75,000.  

A public consultation paper was published in June to seek views 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. 

Currently, 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.

According to MAS, the respondents were supportive of the increased coverage of S$100,000, but a minority of them suggested a higher coverage and broadening the scope of the coverage to include foreign currency deposits. 

In its response, MAS said each increase in the coverage has to be carefully considered, as raising the coverage is not without cost to banks, which will ultimately be passed on to bank customers. 

“As our deposit insurance scheme aims to protect small depositors, its adequacy as a safety net 
can be assessed by looking at the proportion of depositors who are fully insured,” said the authority.

“At S$100,000, it already fully covers the vast majority (91 per cent) of insured depositors under the deposit insurance scheme.”

As for broadening the coverage scope to include foreign currency deposits, MAS has decided to continue excluding those, given that the scheme is intended to protect the core savings of small depositors, which are primarily in Singapore dollars. 

“The proportion of foreign currency deposits held by small depositors is currently not significant,” said MAS, adding that it will continue to monitor the level of foreign currency deposits and review the scheme periodically. 

The majority of the 20 respondents agreed with the proposal to implement the increase from Apr 1, 2024. Some of them requested a later implementation date, citing the need for rigorous system enhancement processes and user acceptance tests. 

They also said there was “insufficient bandwidth” to meet the deadline as deposit insurance scheme members also had to deal with other system changes, such as new data submission requirements by the SDIC.