, Singapore
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Photo from MAS website.

MAS floats raising deposit insurance coverage to S$100,000

This will result in 91% of deposits being fully covered by deposit insurance.

The Monetary Authority of Singapore is proposing to increase the deposit insurance (DI) coverage per depositor to S$100,000.

In a public consultation paper, Singapore’s financial regulator said that increasing DI coverage will result in 91% of depositors as of 2023 being fully covered by the insurance, and increasing the number of small depositors fully covered. It will also reportedly ensure that DI continues to fulfill its primary objective of protecting small depositors in the event of a bank failure. 

The DI was last raised in 2019 from S$50,000 to S$75,000 currently.

Apart from raising DI coverage, MAS is also proposing changes to enhance the operational efficiency of the DI scheme. These include providing the financial regulator powers to stipulate a specific time when deposit balances are taken as final, so as to enhance clarity on how DI compensation is computed; and introducing a time limit for DI compensation claims, to help keep administration costs low given the diminishing likelihood of claims over time.

MAS deputy managing director for financial supervision, Ho Hern Shin, clarified that the proposals are “not in response to stresses faced by some banks abroad earlier in the year.”

“The key to ensuring a safe and resilient banking system is through pre-emptive safeguards, meaning sound regulation and rigorous supervision by MAS, and effective governance and risk management by banks themselves,” Ho was quoted saying in the announcement of the public consultation paper’s release.  

“DI complements these safeguards by providing a safety net for small depositors in the event banks were to fail. The DI safety net helps to provide confidence to small depositors but is no substitute to sound risk management and effective supervision,” Ho added.

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