MAS responds to feedback on proposals to provide clarity on computation of deposit insurance compensation and improve efficiency of deposit insurance operations

18 December 2024

On 19 November 2024, the Monetary Authority of Singapore (“MAS”) issued its Response to Feedback Received on Proposed Enhancements to the Deposit Insurance Scheme in Singapore (Part 2) (“Part 2 of the Response”).

Background

MAS published a consultation paper on 27 June 2023 to seek views on the recommendations to increase deposit insurance (“DI”) coverage per depositor to S$100,000, and to improve the clarity and operational efficiency of the DI scheme. MAS published Part 1 of the consultation response, on the proposed increase in maximum DI coverage from S$75,000 to S$100,000, on 22 September 2023.

Part 2 of the Response

Part 2 of the Response covers MAS’ responses to feedback on proposals to:

  • provide clarity on the computation of DI compensation; and
  • improve the efficiency of DI operations.

There will be a subsequent consultation on the necessary legislative changes to effect the relevant proposals.

Computation of DI compensation

MAS has decided not to proceed with the proposal to introduce powers in the Deposit Insurance and Policy Owners’ Protection Schemes Act 2011 (“DI-PPF Act”) for MAS to stipulate a quantification time where deposit balances are taken as final, following feedback that scheme members would face operational challenges in calculating deposit balances for DI compensation at times other than the end-of-day. DI compensation will instead be determined based on the end-of-day deposit balances. MAS would also require the declaration of quantification date (“QD”) to be accompanied by the immediate cessation of new payment activities to and from the failed scheme member.

Instead of requiring transactions which are not fully settled on QD to be excluded from the calculation of DI compensation, MAS will require failed DI scheme members to compute DI compensation based on deposit balances as of the end-of-day of the next business day (QD+1).

MAS will proceed with its proposal to:

  • require DI scheme members to maintain a continually updated register of insured deposits with the Singapore Deposit Insurance Corporation (“SDIC”);
  • remove the current requirements for annual submissions and notification to SDIC as and when there are changes to the register of insured deposits; and
  • require DI scheme members to publish and maintain a list of all its products which are insured deposits on their website.

Improving efficiency of DI operations

MAS will proceed with its proposal to:

  • provide flexibility on the mode in which DI compensation would be paid;
  • transfer the administration of unclaimed DI monies from the Public Trustee’s Office to SDIC;
  • impose a time limit of seven years from QD or the date when the liquidator is discharged, whichever is later, for insured depositors to claim their DI compensation;
  • clarify that the information which SDIC receives from the liquidator will be taken as final in relation to resolving disputes, and that the balances of insured depositors with the failed bank may not be disputed after the liquidator is discharged; and
  • amend section 28 of the DI-PPF Act to allow SDIC to accumulate recovered amounts before making aggregate payments to relevant stakeholders.

Reference materials

Part 2 of the Response is available on this webpage of the MAS website www.mas.gov.sg.