• While our banking system remains sound, things can go wrong in today’s complex and globalised environment. International experience has shown that banks can fail and depositors can lose their savings even in reputable and well supervised jurisdictions.
• From April 1, 2006, this risk is mitigated with the introduction of deposit insurance. The Deposit Insurance Scheme protects customers of a failed bank or finance company by insuring their deposits for up to $20,000 net of liabilities. Money held in bank deposits under the CPF Investment Scheme are separately insured up to $20,000.
• The deposits must be in Singapore dollars and maintained with branch offices of full banks and finance companies in Singapore. It is worth noting that deposits are not insured separately in each branch office of a bank or finance company.
• The effect of netting means that any loan owing to a failed bank or finance company by a customer is offset against the amount of deposits belonging to the same customer before deposit insurance is paid out.
• Suppose you have $35,000 in your savings account and a $20,000 outstanding car loan with the same bank. Your net deposit with the bank after offsetting the loan amount is $15,000. This $15,000 net deposit is insured under deposit insurance.
• The Singapore Deposit Insurance Corporation (SDIC) administers the deposit insurance scheme in Singapore. More information on deposit insurance and the SDIC can be found at the SDIC website http://www.sdic.org.sg

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