Singapore’s MAS wants to increase deposit insurance coverage to S$100,000/pax
“MAS’ proposals are not in response to the 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.”
The Monetary Authority of Singapore (MAS) has announced a public consultation paper on proposals to increase deposit insurance coverage per depositor to S$100,000.
By increasing deposit insurance coverage from S$75,000 to S$100,000 per depositor per DI Scheme member, Singapore’s financial watchdog aims to ensure that the vast majority of smaller depositors continue to be fully covered, keeping pace with the growth in average deposit balances.
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.
Proposed change will result in 91% of depositors being fully covered
Ho Hern Shin, Deputy Managing Director of Financial Supervision at MAS, said, “MAS’ proposals are not in response to the 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. 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.”
MAS argued that the proposed change will result in 91% of depositors being fully covered by deposit insurance and will ensure that deposit insurance continues to fulfill its primary objective of protecting small depositors in the event of a bank failure.
This level of deposit insurance 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, according to the regulator.
In addition to the increase in DI coverage, the regulator is also proposing the following changes to enhance the operational efficacy of the DI Scheme:
- provide MAS 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
- introduce a time limit for DI compensation claims, to help keep administration costs low given the diminishing likelihood of claims over time.
