Time to raise deposit insurance cap of S$75,000; count SRS funds threshold separately from ordinary deposits

SILICON Valley Bank’s (SVB) failure has shone the spotlight on deposit insurance, which is capped at US$250,000 in the United States – where SVB is located. In Singapore, deposit insurance is capped at S$75,000.

The cap covers Singapore dollar-denominated deposits in savings, current and fixed deposit accounts as well as Supplementary Retirement Scheme (SRS) funds – all adding up to S$75,000 per depositor per financial institution (FI), which includes finance companies.

Although depositors would want to have all their savings insured in the event of a bank failure, prohibitive insurance costs and moral hazard make blanket protection unlikely.