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Calculation of Compensation

 

Amount insured under the Scheme

 

In the event a Scheme member fails, all of your eligible accounts with that member, except for deposits under the CPF Investment Scheme, are aggregated and insured up to S$20,000, net of your liabilities to the member, such as loans.  Deposits are not insured separately in each branch office of a Scheme member i.e. all your eligible accounts maintained with different branches of a Scheme member are aggregated and insured up to S$20,000 net of your liabilities to the member.

 

Moneys held in bank deposits under the CPF Investment Scheme (CPFIS) are separately insured up to S$20,000.

 

Illustration 1 – Calculation of deposit insurance coverage with different deposits

 

Suppose you have S$15,000 in your savings account, S$2,500 in your current account and a US dollar fixed deposit, of US$10,000 with Bank X. You have also placed S$50,000 of your CPF monies in a fixed deposit under the CPFIS. The calculation is as follows:

  Account Balance Amount Insured Amount Not Insured
Savings Account (a) S$15,000    
Current Account (b) S$2,500    
Total insured deposits (c = a + b) S$17,500 S$17,5001 0
Fixed deposit under CPFIS S$50,000 S$20,0002 S$30,0002
       
US Dollar Fixed Deposit US$10,000 0 US$10,0003
Total amount insured   S$37,500  
Notes:
  1. Insured deposits are aggregated and insured up to S$20,000.
  2. CPF monies placed in fixed deposits under CPFIS are insured up to S$20,000
  3. Foreign currency deposits are not covered under the Deposit Insurance Scheme

 

Illustration 2a –You have deposits and an outstanding instalment loan, such as housing loan, with the same bank

 

Suppose you have S$15,000 in your savings account and an outstanding housing loan of S$200,000 with the same bank. The monthly instalment of your housing loan is S$1,500 and you have 2 months' instalments payable to your bank. The amount insured is computed as follows:

  Account Balance Amount Insured Amount Not Insured
Savings Account (a) S$15,000    
Housing Loan instalments due (b) S$ 3,000    
Net Deposits = Deposits less instalments due (c = a – b) S$12,000 S$12,000  
Total amount insured   S$12,0001  

Notes:

  1. Under Singapore’s insolvency law, your deposits will automatically be used to pay off your outstanding liabilities with the bank, if the bank fails. In this illustration, after netting off your outstanding liabilities of 2 months’ instalments due, your deposit with the bank will be reduced to S$12,000.  This amount (S$12,000) is insured by SDIC.  Your recovery of this amount from the failed bank would not depend on whether the bank has sufficient assets to meet its liabilities, as would be the case without deposit insurance.
 

Illustration 2b –You have deposits and an outstanding revolving loan, such as credit card facility, with the same bank

 

Suppose you have S$2,000 in your savings account and a credit card account with a credit limit of S$10,000 with the same bank. The outstanding balance payable in full on your credit card account is S$5,000. The amount insured is computed as follows:

  Account Balance Amount Insured Amount Not Insured
Savings Account (a) S$2,000    
Credit Card outstanding balance payable in full (b) S$5,000    
Net Loan = Outstanding balance payable in full less Deposits (c = b – a) S$3,000    
Total amount insured   S$01  

Notes:

  1. Under Singapore’s insolvency law, your deposits will automatically be used to pay off your outstanding liabilities with the bank, if the bank fails. In this illustration, your savings of S$2,000 will be used to partially pay the outstanding balance payable on your credit card account. The outstanding credit card balance payable will therefore be reduced to S$3,000, and your deposit reduced to S$0. As you would already have recovered the full amount of your deposit through insolvency netting, there is no remaining claim against the failed bank. Therefore, there will not be a deposit insurance payment.

 

Joint Accounts

 

For deposits in joint accounts, each joint account holder’s share of the joint account is combined with his other insured deposits held in his own name. The aggregate amount of insured deposits is insured up to S$20,000. Each joint account holder is assumed to have an equal share in the joint account, unless the Scheme member has records that show otherwise. 

 

Illustration 3 – Calculation of deposit insurance coverage with Joint Accounts

 

Suppose you have S$15,000 in your savings account and you have S$20,000 in a joint account with your spouse. Each person’s share of the joint account is considered to be equal unless otherwise stated in the bank’s records, for the purposes of calculating SDIC coverage. The calculation is as follows:

  Account Balance Amount Insured Amount Not Insured
Savings Account S$15,000    
Your share of Joint Account (S$20,000 ÷ 2) S$10,000    
Total insured deposits S$25,000 S$20,000 S$5,000
Total amount insured   S$20,000  
       
Your spouse’s share of Joint Account (S$20,000 ÷ 2) S$10,000 S$10,000  
Total amount insured for your spouse   S$10,000  
 

Deposits Held in Trust and Client Accounts

 

Deposits held in trust or in client accounts for the benefit of an individual or charity are insured provided that the records of the Scheme member identify the beneficiary or client. The beneficiary’s share of the deposit is aggregated with his other insured deposits and insured up to S$20,000.

 

Deposit Insurance Payout

 

Conditions for payout


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.

 

Announcement of payout

 

If a Scheme member fails, all depositors entitled to receive compensation under the scheme will be contacted with details on how compensation will be made. Depositors do not need to file claims with the SDIC as payouts will be computed based on the records of the failed Scheme member.

 

SDIC will also make official announcements in the Government Gazette, through news stations and daily newspapers, as well as through notices at the failed Scheme member’s branches.

 

Arrangements will be made by the SDIC to pay out the compensation to depositors entitled to compensation as soon as possible. Payment may be made by cheque or by depositing the amount of compensation into new accounts opened for the insured depositors with another Scheme member appointed by the SDIC.

 

If the compensation you receive from SDIC is less than your total amount of deposits net of liabilities with the failed Scheme member, you may file a separate claim with the liquidator of the failed institution for the difference. You cannot claim for the amount that has been compensated for by SDIC.

 

Deposit Insurance Fund

 

A Deposit Insurance Fund (DI Fund) has been established from premium contributions of Scheme members for compensation to insured depositors in the event of a failure of a Scheme member.  The DI Fund will be invested in safe and liquid assets such as Singapore Government Securities, deposits with MAS and other assets approved by the Minister.

 

Scheme members pay annual premium contributions to the DI Fund. The premiums levied on member institutions are differentiated according to the risk they pose to the DI fund.  These risk-based premiums are charged to member institutions as a percentage of the amount of insured deposits they hold, subject to a minimum annual premium of $2,500.  SDIC may impose late payment fees on Scheme members.  The premium rates and calculation of premium contributions payable by Scheme members are set out in the Deposit Insurance Regulations 2006.

 

 
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