DEPOSITORS who worry about their life savings being wiped out should a bank or finance company here go bust can rest assured that a portion of their hard-earned money will be protected.
They will get back up to $20,000 from each full bank or finance company, under a scheme by the Singapore Deposit Insurance Corporation (SDIC) which automatically insures savings accounts in Singapore dollar as well as current and fixed deposits with member banks and financial institutions.
Deposits under the Central Provident Fund investment scheme are insured separately, also up to $20,000, said SDIC, whose board reports to the Finance Minister.
The ongoing global credit crunch has resulted in customers of British bank Northern Rock rushing to withdraw their savings from the lender, amid concerns over its near collapse, last year.
In Singapore, if a bank or finance company goes bankrupt, the SDIC will step in to provide compensation, with payout capped at $20,000.
For example, if you have $10,000 in fixed deposits with Bank A which has folded, you will get back the $10,000.
But if you have $50,000 squirrelled away in Bank B and it goes under, you will get back $20,000.
Mr Ooi Sin Teik, the chief executive officer of SDIC, told my paper: "The amount was capped at $20,000 as this
sum will cover more than 80 per cent of all depositors."
Depending on the sum in their individual accounts, affected depositors will get their payout through cheques or have it deposited directly to their accounts in other financial institutions.
Payouts are drawn from SDIC's Deposit Insurance Fund, which member banks and finance companies pay an annual premium to.
Part-time bartender Daniel Ang, 21, was pleasantly surprised to learn that his "several thousand dollars worth of savings" are automatically protected.
As for depositors with cash assets exceeding $20,000, experts recommended that they seek professional advice on how to safeguard their savings through other investment options.
For a full list of the 32 banks and finance companies covered under the scheme, visit www.sdic.org.sg.
