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OUR MISSION
OUR OBJECTIVES
 
Supervision
Inspections and
Supervisory Reviews
New Legislation
Enhancing Regulatory Frameworks
Market and Business Conduct
Risk Management
B THE FINANCIAL SECTOR: KEY SUPERVISORY
AND REGULATORY INITIATIVES
 
  New Legislation 41
 
Strengthening Corporate Governance Regulations
 
& Guidelines  
41
 
 
Box 5 – Enhancing Corporate Governance Framework  
41
 
Box 6 – Deposit Insurance Scheme  
42
 
Box 7 – Nomination of Beneficiaries Framework  
43
 
Box 8 – New Framework for Trust Companies
 
to Facilitate Wealth Management  
44
 
  NEW LEGISLATION

Box 6 Deposit Insurance Scheme
 

The deposit insurance scheme, which commenced on 1 April 2006, will compensate individuals and charities for the first S$20,000 of their SGD deposits in standard savings, current and fixed deposit accounts, net of liabilities, if their bank or finance company fails. Moneys held under the Central Provident Fund (CPF) Investment Scheme will be insured separately from the depositor’s other deposits, up to S$20,000. This follows the enactment of the Deposit Insurance Act in September 2005.

The Singapore Deposit Insurance Corporation (SDIC), a separate entity incorporated as a company limited by guarantee under the Companies Act, will administer the deposit insurance scheme and manage the deposit insurance fund. Its board of directors will be accountable for its actions and decisions to the Minister in charge of MAS.

The scheme compensates depositors through a fund built up from annual contributions by full banks and finance companies. The fund will raise a sum of S$120 million from banks and finance companies over ten years.

Banks operating in Singapore are required to meet MAS’ high prudential standards. However, while the risk of failure of a strong and well-managed bank is low, it can never be reduced to zero. To protect the core savings of Singapore depositors, the Government decided to introduce a deposit insurance scheme while the economy and the banking system are strong. A deposit insurance scheme in Singapore will strengthen protection for small depositors who are often not in a position to assess the safety and soundness of the banks they deal with.

The deposit insurance scheme will set out explicitly the scope of protection given to depositors and remove the perception that the government will guarantee deposits in case of a bank failure. The scheme has been carefully designed to meet these objectives while at the same time minimising costs to banks and depositors.