People generally consider that money deposited in a bank is always safe as all banks or financial institutions are systematically managed. Perhaps, it’s not absolutely true. In today’s complex environment, anything can turn out to be worse. The money that you deposit in your fixed deposit account also pertain risks. However, to counterbalance this risk, Deposit Insurance Scheme was introduced in Singapore. All the licensed banks in Singapore are supervised by a regulatory body called Monetary Authority of Singapore (MAS). MAS has come up with the Deposit Insurance Scheme to protect customers’ money. Mentioned below are major facts that you should know about the Deposit Insurance Scheme:
What is the need of the Deposit Insurance Scheme?
The economy of Singapore is undoubtedly very stable and the country is among the top economies in the world. Even though the overall financial or economic condition of the country is stable, the stability of individual financial institution cannot be guaranteed. Moreover, majority of the banks and financial institutions operating in Singapore are of foreign origin and their core financial assets are located in overseas locations. As a result, their performance can be independent of the economic performance of Singapore and they might go through financial troubles at times because of which they might not be able to secure the deposits and other assets of Singaporeans. The Deposit Insurance Scheme has been set up keeping in mind the above mentioned factors and it aims to protect small depositors from failures of banking and finance companies.
The Formation of Deposit Insurance Scheme
- The Singapore Deposit Insurance Corporation (SDIC) governs the Deposit Insurance Scheme in Singapore. SDIC was set up under an act of parliament in Singapore the Deposit Insurance and Policy Owners' Protection Schemes Act 2011.
- This scheme was enhanced in the year 2011.
The coverage is based on per bank per person
- The insurance amount is up to S$50,000 per depositor per Scheme member.
- It guards non-bank depositors such as individuals, sole proprietorships, charities, companies, unincorporated entities, and partnerships, with a scheme member.
- Non-bank depositors with trust and client accounts can get insurance up to $50,000 per account.
- Every branch office will not insure deposits separately. All your accounts in various branches of the same bank will be aggregated and insured up to S$50,000.
- Money savings that come under CPF Investment Scheme and CPF Minimum Sum Scheme, are aggregated and insured separately up to $50,000, only if you are a Deposit Insurance Scheme Member.
- The joint account holders will get the funds distributed evenly and the total amount of insured deposits is then covered up to S$50,000.
SDIC provides other services
- SDIC is not a government body, rather it is a company. It was established in 2006.
- SDIC covers insurance policies like endowment plans, life insurances, medical plans, and individual annuities.
- It does not provide deposit insurance coverage for free, rather it charges premiums from financial institutions.
Features of Deposit Insurance Scheme
- All banks in Singapore provide the Deposit Insurance Scheme, except those that are exempted by MAS.
- The transaction must be in Singapore dollars and held in current/savings/fixed deposit accounts.
- Deposit Insurance Scheme excludes certain deposits like structured and foreign currency deposits, investment products like unit trusts and shares.
- If your bank is merged with another one, if you had the insurance before the merger then, your deposit will be insured separately up to S$50,000 till one year after the legal date of the merger.
- You need not pay for the insurance coverage.
Coverage Offered By Deposit Insurance Scheme
The Singapore Deposit Insurance Corporation provides coverage to individuals and other non-bank depositors when the deposit amount is placed with a deposit scheme member. The non-bank depositors can include partnerships, companies, sole proprietorships etc. along with unincorporated entities such as societies and associations. Deposit Insurance coverage is provided by SDIC to insure Singapore Dollar deposits that are placed in any of the Singapore branches of the Deposit Insurance Scheme members and they include the following:
- deposits placed in savings accounts
- deposits placed in fixed deposit accounts
- deposits placed in current accounts
- amounts invested with the CPF Investment Scheme
- amounts invested with the Supplementary Retirement Scheme
- amounts invested with the CPF Minimum Sum Scheme
- Murabaha, as per the guidelines given by the Authority
Products Not Covered by the Deposit Insurance Scheme
The following products are not covered by the Deposit Insurance Scheme:
- structured deposits
- deposits made in foreign currencies
- unit trusts, shares, securities and all other types of investment products
List of Deposit Insurance Scheme Members in Singapore
The following banks and financial institutions operating in Singapore are members of the Deposit Insurance Scheme:
- BANK OF AMERICA
- BANGKOK BANK
- BANK OF CHINA
- BANK OF INDIA
- BANK OF EAST ASIA
- BANK OF TOKYO-MITSUBISHI
- BANK OF SINGAPORE
- BNP PARIBAS
- CIMB BANK BERHAD
- CREDIT AGRICOLE CORPORATE & INVESTMENT BANK
- CITIBANK SINGAPORE
- DBS BANK
- FAR EASTERN BANK
- HL BANK
- HSBC BANK
- INDUSTRIAL AND COMMERCIAL BANK OF CHINA
- ICICI BANK
- INDIAN BANK
- PT BANK NEGARA INDONESIA
- JPMORGAN CHASE
- INDIAN OVERSEAS BANK
- MIZUHO BANK
- MALAYAN BANKING BHD
- OCBC BANK
- RHB BANK
- STANDARD CHARTERED BANK SINGAPORE
- UCO BANK
- SUMITOMO MITSUI BANKING CORPORATION
- SING INVESTMENTS & FINANCE
- HONG LEONG FINANCE
- SINGAPURA FINANCE
Payout of Deposit Insurance
In case any of the banks or financial institutions that are members of the Deposit Insurance Scheme fail, all depositors that fulfil the criteria set by the Singapore Deposit Insurance Corporation (SDIC) will be entitled to receive compensation. The depositors will not have to file any claim for the same and instead SDIC will notify them about how they will receive their compensation and their details will be taken from the records kept by the bank or financial institution.
Conditions for payout
The Monetary Association of Singapore (MAS) may decide that payouts of deposit insurance should be made in case:
- A court has ordered the closure of the member bank or financial institution, OR
- It has determined that the member bank or institution will be unable to meet its monetary obligations or will not be able to meet its obligations, is insolvent, or is about to suspend all payments