SOME 89 per cent of depositors in Singapore are fully insured under the Deposit Insurance (DI) Scheme, said Minister of State for Trade and Industry Alvin Tan in Parliament on Monday (May 8).

The Singapore Deposit Insurance Corporation (SDIC) insures all Singapore dollar-denominated deposits placed with a DI Scheme member, with the deposits capped at S$75,000 per depositor per financial institution.

The number has fallen slightly from 91 per cent in 2019, when the cap on deposits was last raised to S$75,000 from S$50,000.

“Deposit insurance is not the primary way in which we safeguard the interests of depositors, be they small or large… a safe and resilient banking system is underpinned most fundamentally by a combination of pre-emptive safeguards,” Tan said.

He said this in response to questions on the lessons from the closure of several US banks due to uninsured depositor runs, and on whether the Monetary Authority of Singapore (MAS) would review the coverage cap and consider additional bank regulations.

Tan said the DI Scheme complements pre-emptive or ex ante safeguards by providing a safety net for small depositors if banks were to fail.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

The safeguards include sound regulation, rigorous supervision, proactive cross-border cooperation, and effective governance and risk management by the banks themselves.

MAS will work with other regulators – including the Financial Stability Board and the Basel Committee on Banking Supervision – in reviews to develop any needed regulatory responses to enhance the resilience of the banking system.

Tan added that MAS has just concluded its latest regular review of the DI Scheme and will present the proposals for public consultation by the end of June this year.

The review was not in response to the recent stress and that “we should avoid over-reacting to these events”, Tan said.

He noted that raising the cap is not without cost to banks, and may often ultimately mean costs on bank customers themselves.

Tan gave the assurance that the DI fund is “adequately sized” and is designed to meet a solvency standard of 99.9 per cent. It may also borrow from MAS for payments to insured depositors.