MAS Proposes Raising Deposit Insurance Coverage to S$100,000by Fintech News Singapore June 28, 2023
The Monetary Authority of Singapore (MAS) is proposing to increase deposit insurance (DI) coverage per depositor from S$75,000 to S$100,000 in a public consultation paper. The paper also seeks to improve the clarity and operational efficiency of the DI scheme.
The DI limit was last reviewed in 2019 when it was raised from S$50,000 to S$75,000, covering 91% of depositors at that time.
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.
According to MAS, the proposed change will result in 91% of depositors being fully covered by deposit insurance and will ensure that DI continues to fulfil its primary objective of protecting small depositors in the event of a bank failure.
This year alone has seen multiple bank failures including three U.S. banks namely Silicon Valley Bank, Signature Bank, First Republic Bank as well as Switzerland’s Credit Suisse which was snapped up by its rival UBS in a last minute emergency deal. However, MAS stressed that this proposal is not in response to the stresses faced by these banks.
MAS is also proposing the introduction of a time limit for DI compensation claims, to help keep administration costs low given the diminishing likelihood of claims over time.
Interested parties to submit their comments on the proposals by 31 July 2023 here.
Ho Hern Shin, Deputy Managing Director (Financial Supervision), MAS said,
“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.
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.”