What You May Not Know About Bank Deposits: Singapore Perspective

Insurance Corporation

In Singapore, the Singapore Deposit Insurance Corporation (SDIC) is in charge of the Deposit Insurance Scheme. The SDIC protects depositors’ money placed in full banks and finance companies.

If these institutions fail to pay your bank deposits, the SDIC will step in and cover your deposits, up to a certain amount. Make sure you check that your bank or finance companies participate in this insurance scheme. Please note that foreign and offshore banks need not participate in the insurance scheme, so you need to be wary.

How much is Insured?

In Singapore, you can be insured for up to S$20,000 for individual accounts in an insured bank or finance company. However, if you have any loans with the bank, these will be deducted from the insured amount. You may have invested your CPF money in bank deposits; these will be insured separately up to S$20,000.

If you have a joint account, the money will be split evenly by SDIC. That amount is them combined with your individual account and a total of $20,000 will be insured. For example, let’s say you have a joint account of $30,000 and an individual account of $10,000. You will be insured for $15,000 from your joint account. And since you have $10,000 in your personal account, the total you will receive will stand at $20,000. That is the maximum you can receive from that bank.

If you have a designated beneficiary (whether for an individual or charity), the money would then be combined with the rest of the beneficiary’s accounts and the total is insured for up to S$20,000.

What’s Covered?

For individual accounts, you are covered for Savings accounts, Fixed deposit accounts, Current accounts and Deposits under the CPF Investment Scheme (CPFIS).

Individuals and the charities are insured by the SDIC. However, business deposits are not insured by the SDIC.

What’s Not Covered?

You are not covered for foreign currency deposits, structured deposits, deposits placed as collateral, investment products such as unit trusts, shares and other securities.

When do you get your insurance payout?

The Monetary Authority of Singapore has the say when a deposit insurance payout should be made. Here are two instances when you can expect an insurance payout from your bank. Firstly, if your bank or finance company has wound up by a court order, MAS may decide to arrange for deposit insurance to take effect. Secondly, MAS itself may have identified a bank or finance company as being unlikely to fulfill its payments, then an insurance payout is likely to be on its way.

You will be informed if you qualify for the insurance payment if this were to happen.

Useful Tip!

So what happens when you have more than S$20,000 cash? If this happens, be sure to open a different bank account in a different institution. For example, if you have S$40,000 cash, having 2 bank accounts each holding S$20,000 will make sure that all S$40,000 will be insured. But you must ensure that the two banks are not related to each other in any way. They must be two completely different banks.

The economy is uncertain. So, we need to hope for the best, but prepare for the worst.