1. What is deposit insurance?

A: Deposit insurance protects depositors in the event a Scheme member fails. The Deposit Insurance Scheme compensates your savings up to a maximum of S$20,000.

2. How does the Deposit Insurance Scheme work?

A: In the event a Scheme member that is covered under the scheme fails, the MAS will request the Singapore Deposit Insurance Corporation (SDIC) to step in. The SDIC will put its crisis plan into action. Affected depositors will be notified and arrangements will be made for depositors to be paid either by cheque or through accounts opened for them in another financial institution.

The SDIC will make the compensation from insurance premiums that Scheme members pay every year under the Deposit Insurance Scheme.

3. Is the SDIC part of the government?

A: It is not part of the government. The SDIC is a company limited by guarantee under the Companies Act. However, the SDIC is setup by an act of parliament and has been designated to be the Deposit Insurance Agency under the Deposit Insurance Act. The board of SDIC is also accountable to the Minister in charge of MAS.

4. If any bank goes bankrupt, are my deposits covered?

A: Not all banks are covered under the Deposit Insurance Scheme. Only full banks and finance companies are members of the scheme.

If you want to know if your financial institution is a Scheme member, please refer to the complete list of Scheme members.

5. Are foreign banks included under the Deposit Insurance Scheme?

A: All full banks and finance companies in Singapore are required to be members of the Deposit Insurance Scheme. However, wholesale and offshore banks are not required to be members. So a foreign bank which has full-banking license would be included under the Deposit Insurance Scheme.

If you want to know if your financial institution is a Scheme member, please refer to the complete list of Scheme members.

6. How do I know if my deposits are covered by deposit insurance?

A: Individuals and charities with accounts in full banks and finance companies are covered. From 1 April 2006, you can request for a register of insured deposits from any full bank or finance company to find out which deposit products are covered. Also, from 1 October 2006, the account opening forms and deposit account statements will disclose which deposit products are covered.

7. What types of deposits are covered under the Deposit Insurance Scheme?

A: Singapore dollar savings accounts, fixed deposits and current accounts are covered by the Deposit Insurance Scheme. Any deposits in CPF Investment Scheme accounts are insured separately, also up to S$20,000.

8. What is not covered by the Deposit Insurance Scheme?

A: Those products not covered include foreign currency deposits, structured deposits and investment products like unit trusts.

9. Why are foreign currency and structured deposits not covered? They are very popular and the banks have been actively promoting it.

A: Deposit insurance is mainly to protect small depositors. Many of them do not have foreign currency or structured deposits.

Also, foreign currency deposits and structured deposits have an investment feature where the investor is required to assume higher risk for the higher return. Therefore these products do not form part of the core savings or transaction accounts of small depositors.

10. Who is in charge of deposit insurance?

A: The Singapore Deposit Insurance Corporation (SDIC) administers the Deposit Insurance Scheme in Singapore. It has a 6-member board and they are accountable to the Minister in charge of MAS.

If you want to know more about the SDIC, please refer to the Organisation page

11. What about joint accounts?

A: For joint accounts, SDIC will split funds in the joint account evenly unless there are records showing differently. Each account holder’s share is then combined with his or her own accounts and the total amount of insured deposits is then covered up to S$20,000.

For example, if you and your husband have a joint account with S$30,000, and you have a separate account of S$20,000, your total deposits of S$35,000 will be covered to the maximum of S$20,000.

If you want to know about the calculation process for joint accounts, please refer to the Calculation of compensation payout.

12. What about deposits held in trust and client accounts?

A: If the deposits are for an individual or charity, they are insured if the bank can clearly identify the beneficiary. In this case, the money would then be added to the rest of the beneficiary’s accounts and the total would then be covered up to S$20,000.

13. Do I need to pay to be covered by deposit insurance?

A: No. Coverage is automatic.

14. When will there be a deposit insurance payout?

A: MAS may decide that a deposit insurance payout should be made if:

• A court order has been made to wind up a Scheme member; or
• MAS has determined that a Scheme member is insolvent, unable or likely to become unable to meet its obligations, or about to suspend payments

15. What does a depositor need to do when his/her bank or finance company fails?

A: Nothing. If your Scheme member fails, SDIC will provide details on how the compensation will be made. You don’t need to file any claims. SDIC will make announcements through the TV, newspapers and at the affected bank or finance company.

If your deposit exceeds the compensation from the SDIC, you can file a separate claim with the liquidator for the difference but you cannot claim what has already been compensated.

16. How soon will I get my money back after my bank collapses?

A: The SDIC guarantees depositors that they will get up to S$20,000 back in the event of a bank failure. This will be done promptly either through cheque payments or credited in an account opened for you in another bank.

17. The newspapers reported that the compensation is net of liabilities? What does this mean?

A: An individual’s total deposits and total loans will be calculated as at the effective date of the payout, or quantification date. At this point, his total insured deposits (i.e. excluding any structured deposits or unit trusts) will be set off against his loans.  However, where he has contractually agreed to repay his loan in periodic instalments, only the instalments outstanding and in arrears will count against his deposit.

The calculation involves subtracting the depositor’s total liabilities from his total insured deposits as at the effective date of the payout.  The total liabilities will cover all types of credit facilities taken with the failed institution by the depositor in all currencies.  However, only credit facilities that have crystallised as liabilities as at the effective date will be counted.

For example, if you have a revolving credit facility, such as overdraft, with a credit limit of S$50,000 and the outstanding balance is S$10,000, then the amount of S$10,000 would be considered as your liability because the outstanding is recallable on demand.  However, if you have a S$100,000 housing loan, of which you pay S$2,000 a month as instalment and at the effective payout date, you have two months’ instalments which are outstanding and in arrears or S$4,000, only S$4,000 is considered as your liability.  But if you have defaulted on your housing loan of S$100,000 and your bank has served you with a letter of demand to repay the full principal of S$100,000, then the full amount would be considered as having crystallised as a liability to be subtracted from your insured deposits.

Another example is if you have signed a personal guarantee for a renovation loan of S$100,000 for your friend who has defaulted on the loan and you have also been served a letter of demand to repay the loan of S$100,000.  In this instance, the guarantee amount of S$100,000 is also considered as a liability to be deducted from your insured deposits.

If you want to know about the calculation of compensation please refer to Calculation of compensation payout.

18. Why is deposit insurance necessary? I thought Singapore’s banking system is very safe?

A: Yes, Singapore’s banking system is safe and well regulated. The MAS has rules to ensure that banks and finance companies are well managed, well capitalised and have enough liquidity to meet any unforeseen needs.

Deposit insurance is just another layer of protection for small depositors. These are hard-earned savings and while the going is good, it is better to build up an insurance fund than wait for a crisis to happen. Experience elsewhere has shown that if you have a mechanism in place to guarantee the safety of deposits, people are less likely to panic if and when things go wrong.