You must have read the liquidity problems of America’s two troubled mortgage finance giants, Freddie Mac and Fannie Mae. Have you wondered, If your Singapore bank is liquidated, what will happen to you?
Singapore consumers enjoy the benefits of a sound banking system. Banks and finance companies licensed in Singapore are supervised by the Monetary Authority of Singapore (MAS). It is MAS’ aim to ensure the stability of the banking system in Singapore and to require financial institutions to have sound risk management systems and adequate internal controls.
However, MAS does not guarantee the soundness of individual financial institutions. Therefore, a Deposit Insurance Scheme has been set up to protect the core savings of small depositors in Singapore in the event a full bank or finance company fails.
The Singapore Deposit Insurance Corporation (SDIC) administers the Deposit Insurance Scheme in Singapore . SDIC is a company limited by guarantee under the Companies Act. The board of directors is accountable to the Minister in charge of the Monetary Authority of Singapore (MAS).
In the event a Scheme member bank or finance company fails, all of your eligible accounts with that member are aggregated and insured up to S$20,000, net of your liabilities to the member.
(Update: This has been increased to $50,000 since Sep 2010 Followed by MAS announcement)
The main functions of SDIC are to collect premium contributions from Scheme members, manage the Deposit Insurance Fund, compensate insured depositors and educate the public on the Scheme.
Moneys held in bank deposits under the CPF Investment Scheme are separately insured up to S$20,000.