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

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Tay Peck Gek

Tay Peck Gek

Published Wed, Mar 29, 2023 · 05:50 AM
    • Deposit insurance's primary objective is to protect small depositors, whom the government recognised may be less able to make informed decisions and yet most affected by a bank failure.
    • Deposit insurance's primary objective is to protect small depositors, whom the government recognised may be less able to make informed decisions and yet most affected by a bank failure. PHOTO: YEN MENG JIIN, BT

    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.

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