How the Deposit Insurance Scheme Works

The Deposit Insurance Scheme (DIS) in Singapore is a critical safety net designed to protect depositors’ money in the unlikely event of a bank or finance company failure. Understanding how your deposits are safeguarded is essential for financial peace of mind, especially when managing savings or planning for emergencies. 

The scheme is administered by the Singapore Deposit Insurance Corporation (SDIC), a government-backed entity, similar to how the National Credit Union Administration (NCUA) operates in the U.S. to protect depositors. 

This guide provides an overview of the DIS and actionable insights to ensure your funds are secure.

What is the Deposit Insurance (DI) Scheme?

The Deposit Insurance (DI) Scheme in Singapore aims to protect depositors by ensuring that their money is safe if a member bank or finance company fails. The scheme provides automatic coverage for eligible Singapore Dollar (SGD) deposits, including:

• Savings accounts

• Current accounts

• Fixed deposits

• CPF-linked accounts

Coverage Limit

The DI Scheme insures up to S$100,000 per depositor per member bank or finance company. This means that if you have deposits in multiple insured institutions, each account is protected up to this limit separately. 

However, it’s important to note that certain financial products are not covered, such as foreign currency deposits, investment products, structured deposits, and unit trusts. The SDIC operates under the Deposit Insurance and Policy Owners' Protection Schemes Act, ensuring a robust, government-backed framework for depositor protection.

How the DI Scheme Works

The DI Scheme is designed to be seamless and cost-free for depositors, with the SDIC managing the process behind the scenes. Here’s how it operates:

• Funding mechanism: The SDIC collects annual premiums from member banks and finance companies to build a fund for potential payouts. Depositors bear no direct cost—protection is automatic and free.

• In case of bank failure: If a member institution fails, the SDIC steps in to reimburse insured depositors promptly, typically within 7 working days of the failure announcement. Depositors do not need to file claims; the process is handled automatically.

• Account types covered: Protection applies to both individual and joint accounts, with each co-holder of a joint account insured separately up to S$100,000 for their share. CPF-linked deposits are also automatically protected through the SDIC, under the same coverage limits but treated as separate from personal deposits.

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How to get your money back if your bank goes under

If a member bank or finance company in Singapore fails, the process to recover insured deposits is straightforward and depositor-friendly. Here’s a step-by-step summary:

• The Monetary Authority of Singapore (MAS) announces the closure of the institution.

• The SDIC issues compensation notices to affected depositors, detailing the payout process.

• Payments are made automatically – no application or claim is required from depositors.

• Compensation is typically disbursed via bank transfers or cashier’s orders 

• Depositors can expect to receive their insured funds within 7 working days after the failure announcement.

As a best practice, depositors should ensure their personal details, such as mailing address and bank account information, are kept updated with their banks to avoid delays in receiving compensation.

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The limits of the DI Scheme — and how to maximise it

While the DI Scheme offers robust protection, it has defined limits that depositors should understand to manage their funds effectively:

• Coverage Limit: The scheme insures up to S$100,000 per depositor, per member bank or finance company. Any amount above this limit in a single institution is not protected.

• Joint Accounts: These are insured separately, with each co-holder covered up to S$100,000 for their share of the account.

• CPF-Related Accounts: Deposits in CPF Ordinary, Special, Retirement, and MediSave Accounts held with member banks are separately insured up to S$100,000, separate from personal deposit limits.

To ensure full coverage of your funds, consider these strategies:

• Spread deposits across multiple SDIC-insured institutions if your total savings exceed S$100,000 in one bank. Each institution offers separate coverage up to the limit.

• Check if your bank or finance company is an SDIC member by referring to the list on the SDIC website.

• Be aware that amounts exceeding S$100,000 in a single bank are uninsured, so do diversify if you have larger sums.

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Next steps for your peace of mind

To safeguard your deposits and leverage the protections offered by the DI Scheme, take these practical actions:

• Verify SDIC membership: Confirm that your bank or finance company is covered under the scheme by checking the list of member institutions on the SDIC website.

• Limit deposits per bank: Keep less than S$100,000 in each bank if full protection under the DIS is a priority.

• Diversify across insured banks: If you have large sums, spread your funds across multiple SDIC-insured institutions to maximise coverage.

• Update bank details: Regularly ensure your contact and account information is current with your bank to facilitate swift compensation in case of a failure.

• Understand coverage scope: Remember that the DIS only protects SGD deposits, not investment products, foreign currency deposits, or other financial instruments.

• Stay informed: Be aware of both the protections and limitations of the DIS to better manage your financial security.

By taking these steps, Singaporean depositors can rest assured that their eligible savings are protected under the DI Scheme while making informed decisions about where and how to hold larger sums.

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