All You Need to Know about Singapore Deposit Insurance Corporation (SDIC) w.e.f. 1st April 2024

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All You Need to Know about Singapore Deposit Insurance Corporation (SDIC)

The article was published on 25 Mar 2024 and was most recently updated on 1 Apr 2024

Update: Deposit Insurance Scheme is now at S$100,000 max coverage

It's April Fool, but the DI Scheme is getting serious! The maximum coverage under the Singapore Deposit Insurance Corporation (SDIC) has been revised to S$100,000 per depositor starting 1st April 2024. It was initially announced last September, but what has really been a deciding factor though?

Read on and check out FAQs to find out more about SDIC and the important facts you need to know about deposit insurance in Singapore.

Introduction

Financial security and depositor confidence are crucial for maintaining stability in the financial system. When individuals and businesses have confidence in the safety of their deposits, they are more likely to save and invest, which promotes economic growth. It also helps prevent bank runs and systemic crises that can have devastating effects on the economy.

In Singapore, the Singapore Deposit Insurance Corporation (SDIC) plays a key role in safeguarding deposits. The SDIC provides deposit insurance coverage for individuals and small businesses, giving them reassurance that their deposits are protected in the event of a bank failure. By providing this safety net, the SDIC contributes to maintaining depositor confidence and financial stability in the country.


What is the SDIC?

Under the Deposit Insurance (DI) Scheme, SDIC provides insurance coverage for eligible deposits in the event of a bank failure, giving depositors peace of mind and confidence in the banking system. Similarly, under the Policy Owners' Protection (PPF) Scheme, SDIC provides protection to policy owners of life and general insurance policies in the unlikely event of their insurer's insolvency.


In fulfilling its role, the SDIC is accountable to the Minister in charge of the Monetary Authority of Singapore (MAS). This means that the corporation must adhere to the regulations and guidelines set by MAS and provide regular updates and reports on its activities and financial status. This accountability ensures that SDIC operates effectively and transparently, maintaining the trust and confidence of the public and fulfilling its important responsibilities in protecting depositors and policy owners.

Who is Covered by the DI Scheme?


For example, if an individual has a savings account with S$100,000 and a fixed deposit account with S$30,000 in the same bank, the total insured amount would be S$100,000 while the remaining S$30,000 will not be insured.


In the case of joint accounts, each account holder is eligible for the maximum coverage amount, effectively doubling the insurance protection for joint accounts. Trust accounts are also covered, with the beneficiaries or trustees considered as the depositors for the purposes of the DI Scheme.

The coverage does not extend to foreign currency accounts or accounts that are primarily used for investments, such as structured deposits and other investment products.

To determine if your accounts are covered, you can verify with your bank's registry of insured deposits, as mandated by the DI Scheme.

Read also: [2023 Edition] The Best Business Banking Accounts in Singapore

Overall, the DI Scheme provides protection for a wide range of depositors and account types, ensuring that individuals, joint account holders, and beneficiaries of trust accounts are all covered up to the maximum amount in the event of a bank failure.

How Does the DI Scheme Work in Case of Bank Failure?

When a DI Scheme member fails, the claims process begins. The first step involves the appointment of a liquidator or administrator to handle the affairs of the failed member. The liquidator then identifies and verifies the eligible deposits of depositors. Once the claims have been verified, the DI Scheme steps in to compensate depositors for their eligible deposits.

Depositors are typically compensated within a specified timeframe, which may vary depending on the jurisdiction and the specific circumstances of the failure.

In some cases, depositors may receive a percentage of their eligible deposits within a short timeframe, while the remaining amount may be subject to a longer process of recovery. The timeframe involved in the compensation process is aimed at providing depositors with timely access to at least a portion of their funds while ensuring a fair and orderly resolution of the failed member's affairs.

Other Important Information for SMEs

As a small and medium-sized enterprise (SME) owner, it's important to address some common concerns and misconceptions about deposit insurance. The Singapore Deposit Insurance Corporation (SDIC) provides protection for your eligible deposits up to $75,000 per depositor per Scheme member. You will know more about the members later in the article.

It’s also a fact that not all deposits are covered, so it’s crucial to understand the eligibility criteria and coverage limits. The SDIC website offers a wealth of resources and FAQs to help SMEs understand deposit insurance, including detailed information on coverage, eligibility, and how to make a claim in the event of a bank failure.


Policy Owners’ Protection (PPF) Scheme

You may also want to familiarize themselves with the Policy Owners’ Protection (PPF) Scheme, which provides protection for both life and general insurance policyholders in the event of insurer's insolvency.


The process works as follows: members of the DI or PPF Schemes pay premiums to have their deposits or policies insured by the respective schemes. The responsibility for this lies with the bank or insurer, so you don't need to take any action.

List of DI Scheme Members in 2024

The DI Scheme members are as follows:

BANGKOK BANK PUBLIC COMPANY LIMITED

BANK OF AMERICA, NATIONAL ASSOCIATION

BANK OF CHINA LIMITED

BANK OF INDIA

BANK OF SINGAPORE LIMITED

BNP PARIBAS

CHINA CONSTRUCTION BANK CORPORATION

CIMB BANK BERHAD

CITIBANK NA

CITIBANK SINGAPORE LIMITED

CREDIT AGRICOLE CORPORATE & INVESTMENT BANK

DBS BANK LTD

GXS BANK PTE. LTD.

HL BANK

HONG LEONG FINANCE LIMITED

HSBC BANK (SINGAPORE) LIMITED

ICICI BANK LIMITED

INDIAN BANK

INDIAN OVERSEAS BANK

INDUSTRIAL AND COMMERCIAL BANK OF CHINA LIMITED

JPMORGAN CHASE BANK, NA

MALAYAN BANKING BHD

MARIBANK SINGAPORE PRIVATE LIMITED

MAYBANK SINGAPORE LIMITED

MIZUHO BANK, LTD

MUFG BANK, LTD

OVERSEA-CHINESE BANKING CORPN LTD

PT BANK NEGARA INDONESIA (PERSERO) TBK

RHB BANK BERHAD

SING INVESTMENTS & FINANCE LIMITED

SINGAPURA FINANCE LTD

STANDARD CHARTERED BANK (SINGAPORE) LIMITED

STATE BANK OF INDIA

SUMITOMO MITSUI BANKING CORPORATION

THE BANK OF EAST ASIA LTD

THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED

TRUST BANK SINGAPORE LIMITED

UCO BANK

UNITED OVERSEAS BANK LTD


Conclusion

In conclusion, the significance of the SDIC in promoting financial stability and depositor confidence cannot be overstated. By providing deposit insurance to individual depositors, the SDIC gives them assurance that their funds are protected in the event of a bank failure. This protection not only safeguards depositors' savings but also helps maintain overall financial stability by preventing mass bank runs and systemic collapses.

Moreover, the existence of a credible and reliable deposit insurance system like the SDIC helps enhance public trust and confidence in the banking system. This confidence is crucial for a well-functioning financial system as it encourages individuals and businesses to continue using banking services and making deposits, which in turn supports economic growth and development.

This, in turn, benefits the economy as a whole by ensuring the smooth flow of funds and preventing financial crises. Therefore, the SDIC's significance in promoting financial stability and depositor confidence is not only essential for individual depositors but also for the stability and health of the entire financial system.

Frequently Asked Questions

Why is the deposit insurance limit going up to $100,000?

More Singaporeans have been saving more money, and the old limit of $75,000 didn't cover everyone in case a bank fails. Raising the limit to $100,000 helps protect more people.

Why is deposit insurance necessary?

Despite Singapore's safe and regulated banking system, deposit insurance provides an additional layer of protection for small depositors, ensuring the safety of their hard-earned savings.

Do I need to pay for deposit insurance?

No, coverage is automatic. There's no application form or premium payment required. However, it's essential to keep your personal details updated with your bank for prompt compensation processing.

Who is covered by the Deposit Insurance Scheme (DI Scheme)?

1. Individuals

2. Non-bank depositors:

  • Sole proprietorships
  • Partnerships
  • Companies
  • Other unincorporated entities (associations, societies)

What types of deposits are covered by the DI Scheme?

The DI Scheme covers Singapore dollar deposits placed with a DI Scheme member at any of its branches in Singapore. These include:

  • Savings accounts
  • Fixed deposit accounts
  • Current accounts
  • Money under the CPF Investment Scheme (CPFIS)
  • Money under the CPF Retirement Sum Scheme (CPFRS)
  • Money under the Supplementary Retirement Scheme (SRS)

Why aren't foreign currency and structured deposits covered?

While popular and actively promoted by banks, the DI Scheme prioritizes protecting small depositors. These depositors often lack foreign currency or structured deposits, which are investment products carrying higher risk for potentially higher returns. They typically aren't considered core savings or transaction accounts for small depositors.

Who administers deposit insurance in Singapore?

The Singapore Deposit Insurance Corporation (SDIC) administers the Deposit Insurance (DI) Scheme, accountable to the Minister in charge of the Monetary Authority of Singapore (MAS).

What deposits are covered by deposit insurance?

Insured deposits in one's name and sole proprietorship deposits with the same Scheme member are aggregated. Partnerships are treated as a single entity. Trust and client accounts of non-bank depositors are insured on a per-account basis up to S$100,000. Refer to Calculation of Compensation for more.

How are joint accounts protected under the Deposit Insurance Scheme?

Each account holder's share of a joint account is added to their individual accounts at the same bank to determine their total insured deposits. There's a maximum coverage of S$100,000 per depositor. Unless the bank has records showing otherwise, each joint account holder is assumed to have an equal share in the account.

I'm a sole proprietor. How does the Deposit Insurance Scheme cover me?

Great question! The scheme combines deposits in your name and your sole proprietorship's name at the same bank for coverage purposes. If your sole proprietorship is owned by a company, their deposits are also added together. Refer to Calculation of Compensation for more.

How does the Deposit Insurance Scheme work for partnerships?

Partnerships are treated as a single entity for coverage, with a maximum insured amount of S$100,000 per partnership. Deposits individual partners have at the same bank are not combined with the partnership's deposits.

For trust and client accounts, how are the deposits treated under the Deposit Insurance Scheme?

Deposits held in trust and client accounts are insured on a per account basis, up to a maximum of S$100,000 per account.

What happens during a bank merger?

If a bank merger results in deposits exceeding S$75,000, SDIC provides coverage up to S$150,000 for one year after the transfer, combining separate protection limits into a single limit.

Is pledged deposit coverage affected?

No, pledged deposits are insured up to the S$100,000 limit under the DI Scheme from 1st April 2024.

When does a deposit insurance payout occur?

A payout may occur if a court orders the winding up of a DI Scheme member or if MAS determines insolvency, inability to meet obligations, or an imminent suspension of payments.

What about the different offers from each bank?

  1. MariBank is raising its deposit limit to S$100,000 and offering a higher interest rate (2.88%) for savings accounts until June 30th.
  2. GXS Bank is keeping its deposit limit at $75,000 for now.
  3. Trust Bank already has a high deposit limit ($500,000) and offers an interest rate of up to 3% per year.

Check with your bank to see if they are changing their deposit limits or interest rates.

Is there a limit on the time frame for a deposit insurance payout after a bank failure?

Yes, a payout may be made if a court order for winding up or MAS determination of insolvency occurs.

What about my outstanding housing loan and car loan from the bank? Will these loans be deducted from the deposit insurance payout?

Any outstanding loans you owe to the bank (credit card, housing loan, etc.) won't affect the insured amount you receive under the DI Scheme. However, you'll still be responsible for repaying those outstanding amounts to the liquidator if the bank fails.

How do I keep my deposit insurance active?

You don't need to take any specific actions to maintain coverage. However, it's crucial to keep your bank updated with your latest contact information (name, ID number, phone number, and address) to ensure they can reach you promptly for payouts in case of a bank failure.

What should I do if my bank fails?

There's no need to file individual claims with SDIC (Singapore Deposit Insurance Corporation). They will use the failed bank's records to calculate payouts and announce them through various channels like the Government Gazette, mass media, and their website.

What if the payout is less than my total deposit?
SDIC will act on your behalf and file a claim with the bank's liquidator to recover the difference between your deposit and the initial payout.

How can I find out my compensation amount?
In the event of a bank failure, SDIC will activate an Insured Depositors' login portal on their website. This portal allows you to view your insured deposits with the failed bank and the corresponding compensation amount under the DI Scheme. Additionally, you'll receive statements and payment letters sent to your registered address with the failed bank. More information will also be available on the SDIC website during such an event.

Where can I find more information about deposit insurance in Singapore?

For additional details, refer to the SDIC and Organisation sections for insights into the Deposit Insurance Scheme's administration and structure.

Read also: [2023 Edition] The Best Business Banking Accounts in Singapore
Read also: Risk Management: Insurance Coverage for Business Premises – What You Need to Know
Read also: Business Guide: Getting Started With A Business Brokerage Account In Singapore
Read also: Banker's Guarantees vs Insurance Bonds: What You Need To Know In 2024

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