The Monetary Authority of Singapore (MAS) released a public consultation paper on Tuesday, June 27, proposing to raise the deposit insurance coverage limit to SGD 100,000 to enhance the clarity and operational efficiency of the deposit insurance scheme. This means that if a bank or financial company fails, each depositor can claim up to SGD 100,000.
MAS suggests increasing the maximum insured amount of deposit insurance from SGD 75,000 per depositor to SGD 100,000. This will ensure that the full deposit amounts of the vast majority of smaller depositors continue to be insured, in line with the growth of average deposit balances.
This change will protect all deposits of 91% of depositors and will ensure that deposit insurance continues to achieve its primary goal of protecting small depositors in the event of a bank failure. MAS believes that this level of deposit insurance protection strikes an appropriate balance between providing a high level of protection for depositors and managing the cost of protection.
To improve the operational efficiency of the deposit insurance scheme, MAS proposes to be given the power to determine when deposit balances are final, to clarify how to calculate deposit insurance compensation, and to set time limits for deposit insurance claims, which will help keep administrative costs down.
These proposals stem from MAS's regular review of the deposit insurance scheme to ensure that it continues to achieve its objectives. The last review of the deposit insurance limit was in 2019, when it was raised from SGD 50,000 to SGD 75,000, protecting all deposits of 91% of depositors. With the growth of deposit amounts, the proportion of depositors whose entire deposit is protected slightly fell to 89% in the first quarter of 2022. The public can download the consultation document from the MAS website for more details and submit their comments on these proposals before July 31.
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