MAS consults on proposed enhancements to deposit insurance scheme in Singapore
28 July 2023
On 27 June 2023, the Monetary Authority of Singapore (“MAS”) published a public consultation paper seeking feedback on proposals to increase the deposit insurance (“DI”) coverage per depositor to S$100,000, and measures to improve the clarity and operational efficiency of the DI scheme (“DI Scheme”). The consultation closes on 31 July 2023.
The proposals follow MAS’ periodic reviews of the DI Scheme to ensure that it continues to fulfil its objectives.
Increased DI coverage
MAS is proposing to enhance depositor protection by increasing the maximum DI coverage from S$75,000 to S$100,000 per depositor per DI Scheme member with effect from 1 April 2024. 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. The proposed change will result in 91% of depositors being fully covered by DI and will ensure that DI continues to fulfil its primary objective of protecting small depositors in the event of a bank failure. MAS says that this level of DI 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.
Improved clarity and operational efficacy
In order to improve clarity on how DI compensation is computed, MAS proposes to provide itself powers to stipulate a quantification time where deposit balances are taken as final.
In addition, to enhance the operational efficacy of the DI Scheme, MAS proposes to introduce a time limit of seven years for DI compensation claims. This will help keep administration costs low given the diminishing likelihood of claims over time.
Reference materials
The following materials are available on the MAS website www.mas.gov.sg: