DEPOSIT INSURANCE BILL

Sitting resumed at 4.20 pm

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[Mr Deputy Speaker (Mr Chew Heng Ching) in the Chair]

DEPOSIT INSURANCE BILL: Order for Second Reading read.

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The Minister for Education (Mr Tharman Shanmugaratnam): Mr Deputy Speaker, Sir, on behalf of the Senior Minister, I beg to move, "That the Bill be now read a Second time."

Sir, this Bill seeks to establish a deposit insurance scheme in Singapore. Once enacted, it will provide an explicit, limited guarantee to insured depositors that they will be compensated, up to a specified amount, in the event of a failure of a full bank or a finance company in Singapore.

Sir, the deposit insurance scheme has been three years in the making, since MAS announced its intentions in June 2002. MAS has consulted the industry and the public on the key features of the deposit insurance scheme and has received broad support for the scheme. We have considered and incorporated the comments we have received, where appropriate, in the course of finalising the features of the deposit insurance scheme. MAS will also be holding consultations on the specific regulations required to implement the deposit insurance scheme envisaged in the Bill. The deposit insurance scheme is expected to come into effect on 1st April 2006.

Why we need deposit insurance in a dynamic and sound financial system

Sir, let me first set out the thinking behind the introduction of a deposit insurance scheme in Singapore.

MAS began a process of liberalising and opening up the domestic banking sector in 1999 to foster a more dynamic and innovative financial centre, and to strengthen the local banks by injecting more competition in the system. At the same time, MAS has shifted away from one-size-fits-all regulation of financial institutions, towards a risk-focused supervisory approach that is tailored to the institution in question - basically,

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tailored to its scale, its business model and the activities that it conducts, the impact that problems in the institution will have on the financial system as a whole, and MAS' assessment of the strength of the firm and its management. MAS' aim in opening the market to more competition, and in shifting towards risk-focused supervision, has been to foster a banking system that is not only strong, but innovative and able to take well-managed risks.

The domestic banking market is now highly competitive. There is a greater presence of strong foreign banks, including six banks which have been awarded Qualified Full Bank (QFB) privileges. Increased competition has resulted in lower prices for customers and a wider range of services and products. The seven local banks in 1998 have consolidated into the three local banking groups that we have today. Their scale and complexity of operations have also increased. They have expanded their fee-earning business activities and their presence abroad so as to grow and diversify their revenue base. They have also upgraded their risk management capabilities, and are managing their capital more efficiently.

Five years into a more liberalised banking sector, the local banks are more dynamic and are expanding abroad, but remain strong. They have responded well to competition, and have held their own.

While our banking system remains sound, the growing complexity and scope of banking businesses will present challenges to supervision, in all financial centres. Increasingly, the operations of banks with a global or regional presence are influenced by factors beyond the control of supervisors in a single market. While MAS' licensing, regulatory and supervisory standards will aim to ensure the safety and soundness of the banking

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system in Singapore, international experience has shown that the possibility of a bank failure and loss to depositors cannot be eliminated even in reputable and well supervised jurisdictions. Further, we should not seek to eliminate all risks of failure, even if it was possible to do so. It would call for onerous rules that would stifle enterprise and ultimately weaken our banks. In seeking to promote and preserve stability in the financial system, we therefore cannot and should not introduce rules to guarantee the soundness of individual financial institutions.

Market discipline plays an important part in keeping the financial system safe and sound. MAS has embarked on initiatives to empower consumers through financial education and by enhancing the efficiency of dispute resolution mechanisms for retail consumers.

MAS recognises that small depositors will often not be in a position to assess the safety and soundness of banks. But the solution to this should not be for Government to guarantee their deposits - even implicitly, if not explicitly. All experience internationally shows that the effectiveness of market discipline is blunted if depositors simply look to Government for a guarantee of their deposits. It leads to moral hazard and excessive risk-taking - amongst depositors, who will place their money where the returns are highest regardless of the risks, as well as amongst the banks themselves.

In Singapore, the Government or MAS has not issued any guarantee for bank deposits. However, the absence of an explicit limited deposit insurance scheme could lead depositors to assume that the Government would guarantee their deposits should a bank fail.

Sir, a deposit insurance scheme is for these reasons a useful plank in a dynamic

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and competitive financial system. It will complement the roles of boards of directors and management of banks, and of MAS supervision of the banks, which seek to ensure that banks manage their risks prudently as they grow and become more complex in their operations.

Deposit insurance will serve two purposes. First, it will provide an adequate layer of protection for small depositors. Second, a deposit insurance scheme will clarify explicitly the extent of protection given to depositors and dispel any misperception that there is an implicit Government guarantee on deposits.

Explicit deposit insurance schemes are present in about 80 countries worldwide. It is timely to introduce a deposit insurance scheme in Singapore now when the banking system is sound. It is better to build up a deposit insurance fund slowly when the banking system is healthy, than to tax the banking sector heavily when a failure has occurred.

Mr Deputy Speaker, Sir, I will now go through the key provisions of the Bill.

Key measures under the Deposit Insurance Bill

Coverage of deposit insurance

The level and extent of coverage is a key feature of any deposit insurance scheme. In arriving at its decision on this matter, MAS was guided by both the need to provide adequate protection for small depositors, as well as the need to limit costs and preserve market discipline. The higher and the broader the coverage, the higher the cost will be to the banks. This would normally result in banks passing on higher costs to depositors, and will impair the competitiveness of banks in Singapore. Overly-generous coverage under the deposit insurance scheme could

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also lead to moral hazard, where large depositors and the banks themselves take on excessive risk.

The Bill therefore seeks to provide adequate protection to small depositors, who are least able to make informed decisions, while containing the costs of deposit insurance and preserving the incentives for large depositors to exercise market discipline. The deposit insurance scheme is meant for small depositors, not for large or sophisticated depositors.

We have therefore decided on a $20,000 coverage limit, per depositor per institution, net of liabilities to the failed institution. Clause 31 of the Bill sets this out. This means that a depositor would receive compensation under the deposit insurance scheme for the first $20,000 of his aggregate insured deposits in his bank or finance company, if it should fail. MAS' study shows that this level of coverage would protect in full the deposits of about 87% of individual depositors.

The scheme will only cover deposits held by individuals. Deposits of businesses (including sole proprietorships and partnerships) will not be insured. In view of public interest, the scheme will also cover registered and exempt charities.

The next question is the type of deposits to be protected. The deposit insurance scheme will insure Singapore dollar deposits in standard savings, current and fixed deposit accounts in all full banks and finance companies. This will cover a range of such deposits, including, for instance, Islamic deposits that are principal-guaranteed, but will exclude products which are investment-oriented. Investment products, foreign currency deposits, structured deposits and deposits placed as collateral will not be insured. The deposits to be insured are specified in the First Schedule.

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The coverage limit will be on a per depositor per institution basis. This means that balances in all standard savings, current and fixed deposit accounts belonging to the same depositor, whether in his own name, held jointly with another person, or in a trust account where he is the beneficiary, will be aggregated to compute the compensation payout. However, we have given special consideration to CPF savings placed in such types of bank deposits, given the important social role of CPF funds as core retirement savings. Moneys held under the CPF Investment Scheme will be separately insured up to $20,000. These are moneys held in bank deposits under the CPF Investment Scheme.

Coverage on a per depositor basis, under which all of a person's deposit accounts in a bank are added together, is the most equitable way. It is preferable to coverage for each deposit account, which could lead to large depositors splitting their deposits in several deposit accounts in a bank to take advantage of a higher level of coverage.

By introducing deposit insurance coverage in this targeted manner, the size of the Deposit Insurance Fund, and consequently the premiums levied on banks, can be kept affordable.

_Deposit Insurance Fund
_

Clause 9 establishes a deposit insurance fund that will be built up from premium contributions of the banks and finance companies who are Scheme members. The fund will pay compensation to insured depositors in the event of a failure of a Scheme member.

Some countries levy contributions on Scheme members only after a bank failure, in other words, ex-post, to make the payouts required to depositors. We considered this very carefully. We have

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decided to levy premium contributions in advance, in other words ex-ante, or before any bank failure, so as to build up a deposit insurance fund.

There are several advantages to ex-ante funding. Firstly, it ensures a readily available pool of funds to enable prompt disbursement should compensation need to be made. Secondly, it is fairer to collect premiums before a bank failure than after a bank failure, as the failed Scheme member would also have contributed to the fund. Ex-ante funding also mitigates the pro-cyclical effect that large ex-post contributions may have on the banking sector - in other words, it does not impose hefty costs on banks at times of economic difficulty, which could lead to further economic contraction. Finally, collecting premiums to build up a ready fund in advance reinforces public confidence in the deposit insurance scheme, and dispels any expectation of a Government guarantee on deposits.

The targeted fund size, to be built up over 10-11 years from these premium contributions, is equivalent to 0.3% of total insured deposits in the banking system, currently estimated at about $120 million. MAS' analysis has found that this would be an adequate fund size given the key features of the deposit insurance scheme, such as the scope of coverage, the priority claim given to insured deposits, the fact that we do not face a high risk of bank failure in Singapore, and the good likelihood of recovering sufficient assets from the failed bank to meet its insured deposit liabilities. The Deposit Insurance Agency would also be able to borrow to fund any temporary shortfalls, and to impose additional premiums on banks should it be necessary to recapitalise the fund.

Foreign full banks which operate as branches in Singapore will be required to maintain a minimum level of Singapore-

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domiciled assets of at least 100% of their insured deposits.

In the event of a bank failure, the Deposit Insurance Agency will make compensation payout to insured depositors from the deposit insurance fund. It will then stand in the shoes of the insured depositors to claim against the assets of the failed bank for the amount of compensation that has been paid out. The Bill will also give insured deposits priority over other deposit liabilities of the bank. These measures - asset maintenance of foreign bank branches and insured deposit priority - will strengthen recovery by the Deposit Insurance Agency from the failed institution of the amount it has paid out as compensation. They serve to lower the necessary size of the deposit insurance fund and hence the cost of deposit insurance.

The Fund will be invested in safe and liquid assets such as Singapore Government Securities, deposits with MAS and other assets approved by the Minister.

Premiums

Next, the question of premiums to be paid by different institutions. Full banks and finance companies will be required to contribute premiums in order to build up the deposit insurance fund. But charging a flat rate to all institutions regardless of risk will be inequitable, and dulls the incentive for institutions to improve their risk management. Premium contributions will therefore be based on the risk profiles of members of the Scheme, so that less risky and better-managed Scheme members will be charged lower premiums. Initially, premiums charged will be set at an average of 0.03% of insured deposits, which are among the lowest premium rates in the world.

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Compensation

The Bill sets out the procedures for triggering a payout from the Deposit Insurance Fund. It provides MAS with the powers to determine that a payout be made to insured depositors from the Deposit Insurance Fund if a court order has been made to wind up the Scheme member or if MAS is of the opinion that a Scheme member is insolvent, unable or likely to become unable to meet its obligations, or is about to suspend payment.

If depositor payout is triggered, the Deposit Insurance Agency will make an official announcement. Depositors need not file claims with the Deposit Insurance Agency as payouts will be computed based on the bank's records. The Deposit Insurance Agency will make arrangements to pay out compensation to eligible depositors.

As I stated earlier, eligible depositors will be insured up to a maximum of $20,000 in a bank. If the deposit insurance payout received is less than the depositor's total amount of deposits in the bank, the depositor may file a separate claim with the liquidator of the failed bank for the difference between the amount of his deposits in the bank and the deposit insurance payout.

Deposit Insurance Agency

A Deposit Insurance Agency, separate from MAS, will be established to administer the deposit insurance scheme and manage the Deposit Insurance Fund. The Deposit Insurance Agency will also conduct public education on the deposit insurance scheme.

The Deposit Insurance Agency will be incorporated as a company limited by guarantee under the Companies Act. The board of directors of the Deposit Insurance Agency will be appointed by

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and accountable to the Minister in charge of MAS for its acts and decisions.

The budget of the Deposit Insurance Agency will be approved by the Minister. The Bill also includes provisions for the Deposit Insurance Agency and Fund to be audited, and for a copy of the audited financial statements, auditor's report and annual report to be provided to the Minister. The Deposit Insurance Agency's financial statements and annual report will also be made available to the public.

Sir, a deposit insurance scheme in Singapore will strengthen depositor protection as our financial sector continues to grow in dynamism and complexity. The existence of an explicit, limited deposit insurance scheme will also dispel public misconception of a blanket Government guarantee of deposits. It will preserve incentives for market discipline, which is essential for a safe and sound financial system. The key features of the deposit insurance scheme, that I have highlighted, have been carefully designed so as to achieve these objectives, while limiting costs and maintaining the competitiveness of our banks.

Sir, I beg to move.

Question proposed.

Dr Ahmad Mohd Magad (Pasir Ris-Punggol): Mr Deputy Speaker, Sir, thank you for allowing me to speak on this Bill.

This legislative move to compensate depositors should the bank they place their funds in fail is quite overdue, considering that a number of Asian countries already have such a scheme in place for quite some time. At the same time, the Bill should dispel any misperception by depositors that their money is guaranteed by the Government in the event that the bank they have their deposits in goes bankrupt.

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Sir, as we go more up-market in our banking sector, become more sophisticated and attract more banks to operate here in our endeavour to position ourselves as a truly international financial hub, it is inevitable that such moves expose depositors to a higher degree of risks. While the MAS is responsible to ensure that the banks operating here are subject to stringent rules and checks, it cannot guarantee that no banks or finance houses, local or foreign, will not fail. The collapse of Britain's Barings Bank in February 1995 is perhaps the quintessential tale that should still be fresh in the minds of many people, particularly those within the financial circle. The failure was completely unexpected and occurred over a course of days, all arising from the action of a single trader here by the name of Nick Leeson. While the circumstances may be different considering the fact that Barings Bank was a merchant bank, there is no guarantee that it cannot happen to any full-fledged bank.

Hence, while depositors should hail the introduction of the Deposit Insurance Bill as their deposits will be guaranteed a return of up to $20,000 in the improbable event that their bank faces liquidation, the first big question that is in everyone's mind is how much of this protection cost will be passed on to depositors. Ideally, banks should look at the cost of such premiums as a business cost to them rather than passing part of, or worse still, the full cost on to depositors.

Since the determination of premiums will, among others, also be based on the risk profiles of the banks, I would like to suggest that the MAS consider the publication of a profile rating of the banks here so as to enable depositors to make an informed decision of where their deposits will be safest. Members of the public should also have a clear understanding that the limit of $20,000 applies to each depositor per institution

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that they have their funds deposited in. This is important to enable depositors to decide whether they place all their eggs in one basket or spread them over several banks, if doing so makes them feel more secure.

Sir, in going over the Bill, I have a few comments and concerns which I would like Minister Tharman to address.

First is with respect to clause 3. I would like the Minister to clarify how the protective sum of $20,000 is arrived at. According to a publication of the Federal Reserve Bank of San Francisco on deposit insurance programmes in Asia dated March this year, the Federal Deposit Insurance Corporation, which is analogous to the proposed Deposit Insurance Agency as provided for in this Bill, each depositor account is insured for approximately US$100,000. In Taiwan, the insurance amount under the Central Deposit Insurance Corporation is US$32,000. In Japan, the corresponding amount is US$95,000. In Korea, it is US$50,000. It appears that all the nations noted here have a ratio computed as Insured Coverage over GDP per capita of 1.3 to 3.4 - a broad but reasonable range. Singapore's ratio is 0.44, taking the assumption that our per capita GDP is US$27,000 and the prevailing exchange rate being $1.65 to the US dollar. In general, wealthier countries have a higher ratio due to the existence of larger deposit balances. On the basis of this simple computation, I believe Singapore too could afford a higher ratio to provide for greater protection to its depositors.

The second point related to this clause is that a fixed quantum, as proposed in the Bill, will potentially be quickly overtaken by events and may become irrelevant when the Scheme fully matures in 10 or 11 years. It may attract controversy if it is not adjusted to the

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prevailing appropriate protection value. I would like to advocate that the coverage

limit be adjusted for inflation, at least on an annual basis, so as to retain the value of the deposit insurance amount at the prevailing point of time.

Sir, it could generally be argued that proper insurance coverage provides confidence that spills over into other sectors. The same can be said of the potential effect of a deposit insurance scheme, such as the one being proposed, on the wealth management industry that we are trying to nurture here. While this point is mute during relative periods of calm, its influence during troubled times cannot be under-estimated.

My next point pertains to clause 6. While this clause provides under exceptional circumstances for a full bank or finance house to be exempted from membership of the Scheme, the clause is silent on the need for such exempted institutions to clearly notify depositors as such. To build confidence on the proposed Deposit Insurance Scheme and the agency to be formed to administer the scheme, I would suggest that the MAS require that both members and non-members clearly state in some form, of their status of membership of the Scheme.

On clause 24, while this provision is useful as it provides recourse for the Authority to seek additional premium contributions in the event of a shortfall of funds, it falls short of addressing a worst-case scenario, such as in a remote event where a number of banks and financial houses may collapse simultaneously, calling for a demand of a large amount of payout beyond the targeted fund of $120 million. I may sound a bit pessimistic here but I think there is a need to be comprehensive. I would like to ask the Minister whether the Government would step in in such a scenario to make up for the difference in payout requirements.

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Moving on to clause 30, occurrence of events precipitating payment of compensation should preferably have an enactment date as well as a cut-off date. The Bill should make it clear that the Agency is required to disburse payments within a specified timeframe, say, three months from a Court order date or when a Scheme member is made insolvent and stipulate that it would cease payments within a specified time period too. This would ensure a systematic procedure to process disbursements and claims, as well as frame a limit on depositors requiring time to gather evidence on their claims.

My final point, Sir, is with respect to clause 52 concerning the protection from liability of the Agency and its officers. I feel a fundamental issue of transparency is being circumvented in this particular clause. The Ageny operates on the tenet of public money or, specifically, money deposited by Scheme members. I feel that the public, as well as Scheme members, should have some form of recourse to address concerns that may be deemed necessary in the event of a violation in procedure. Failure to provide for an unbiased accounting or arbitrating conduit for the Scheme members, and particularly depositors, will not bode well for the Agency, which may be subject to the magnifying lens of public opinion. It may, therefore, be prudent not to include such an overarching and over-protective clause to protect the agency and its direct associates.

On that note, Sir, I support the Bill.

Mr Tharman Shanmugaratnam: Sir, I would like to thank Dr Ahmad Magad for his support for the Bill and his constructive remarks. Let me, first, address his opening observation. As he noted, many other Asian markets have deposit insurance schemes and he felt that it was overdue in Singapore. Let me reiterate that our financial system is safe and sound - in fact, safer and more sound

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than any other in Asia and one of the safest in the world.

So, why are we introducing a deposit insurance scheme? It is not too late, but it is better that we do it now when the system is healthy. And as we continue to grow in complexity as the banking system expands abroad, more competition is brought into the system. By doing this now, depositors understand that even in a well-supervised banking system, there is a risk of bank failure, and understand that deposits are not guaranteed. The deposit insurance scheme also makes explicit that protection for deposits is not absolute but is limited. It specifies exactly how much each depositor can expect. So it is better that we do this now when the system is healthy than wait for a bank failure to occur, even if there is a low probability of that occurring.

Let me address some of the specific points and suggestions which Dr Magad has made. First, on the question of whether and how much cost would be passed on to depositors. This was a key consideration when we designed the scheme - how do you provide adequate protection to depositors but in a cost-effective manner? It is why we designed the scheme to be quite targeted, not to have too broad a coverage. It is why we limited the scheme to only small depositors and also to only Singapore dollar deposits of a standard nature, ie, core savings of depositors. It is also why we have put in features such as ensuring that insured deposits have priority over other deposit liabilities of the bank and why we are requiring foreign bank branches to maintain sufficient assets in Singapore to meet their actual deposits. These measures will help keep the deposit insurance fund low, keep the target size of the fund low and, therefore, keep the cost of the fund on the banks low.

The targeted fund size is 0.3% of total insured deposits to be built up over 10 or

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11 years. So this means that the average annual premium will be about 0.03% of the bank's insured deposits. This is one of the lowest premium rates in the world. If the banks passed on the cost fully to depositors, it would mean a 0.03% charge on a depositor with a $20,000 account. Whether the banks do, in fact, pass on cost and how much of the cost they pass to depositors will be a commercial decision determined in our competitive marketplace.

Next, Dr Magad suggested that we consider publication of the risk profile of banks here so as to enable depositors to make informed decisions. Banks' credit ratings are currently published and publicly available. I think it is useful for the Deposit Insurance Agency to consider making that more conveniently available to members of the public, for instance, by putting published credit ratings on its website or encouraging the media to carry such ratings. MAS' supervisory ratings, on the other hand, are not and cannot be disclosed because they are based on confidential information obtained in the course of supervision. Making public such information would hinder supervision and make the financial institutions less willing to cooperate fully with the MAS. This is also the practice adopted by reputable supervisors abroad.

Next, Dr Magad's question - an important one - on whether the $20,000 coverage limit was adequate. He noted that it was low compared to some other countries. This is a key issue. Our survey of bank deposits in Singapore has shown that the $20,000 coverage limit will provide full coverage to the vast majority or 87% of individual depositors. This percentage (87%) is well in line with international norms. In fact, the IMF suggests between 80% and 90% of individual depositors be covered. The $20,000 quantum is also fairly similar to

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that which has been enacted in Hong Kong - they recently passed legislation on their deposit insurance scheme. The marginal benefit of increasing the coverage limit beyond $20,000 is not large. For instance, if we double the coverage to $40,000, it would insure only an additional 7% of depositors. I should also mention that at $20,000, we will be able to cover, in value terms, 40% of the value of individual deposits and this is, in fact, significantly higher than most other countries. Dr Magad's comparison of deposit insurance coverage relative to per capita GDP, the $20,000 figure compared to per capita GDP, is an interesting one. But he has to take into account the fact that we have a CPF system in Singapore. For a significant majority of depositors, a fair proportion of their financial assets are really with the CPF, which is guaranteed by Government.

Next, the question of whether we should be fixing the coverage limit, in terms of a fixed dollar quantum ($20,000) or whether it should be adjusted annually, as Dr Magad has suggested, for inflation. It is a valid point conceptually. The deposit insurance coverage has to be reviewed from time to time to ensure that it continues to be adequate in real terms. But reviewing the coverage limit on an annual basis will add to administrative complexity and will increase the cost for banks. Most countries have a fixed dollar quantum coverage which is reviewed after a number of years. We have assessed that $20,000 is likely to serve us for some time to come, certainly for the next 10 years, and we will review it at a later point in time.

Dr Magad also asked about full banks or finance companies being exempted from membership and whether in such circumstance, the MAS should require that they disclose the fact that they have been exempted. First, let me say that the exemption clause that is provided for in the Bill is unlikely to be operative. It is to

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allow a foreign full bank that is covered by a deposit insurance scheme in its home jurisdiction which extends comparable protection to Singapore depositors, to be exempted from the Singapore scheme. Currently, there are no financial institutions that will qualify for exemption from membership under our scheme. All full banks and finance companies will be required to be members. However, should there be a case where a foreign institution qualifies for exemption from the Singapore scheme, Dr Magad's suggestion is a useful one. The Deposit Insurance Agency could require the exempted bank or institution to disclose that it is not a member of the Singapore scheme. This can be contained in the rules that will be issued by the Deposit Insurance Agency.

Dr Magad had also raised the question of whether the Government should step in if the deposit insurance fund proves to be insufficient in the extreme situation where the funds are inadequate. First, the deposit insurance fund is adequate for most situations. The risk of bank failure is not zero, but it is very low. And in the rare event that the fund size is inadequate, the Deposit Insurance Agency can borrow to fund potential shortfalls. For example, the Agency can take loans from financial institutions or issue capital market instruments. The MAS may also require Scheme members to contribute additional premium contributions to recapitalise the deposit insurance fund. Dr Magad noted that simultaneous bank failures are a remote event. They are remote. Actuarial computation has shown that the fund size of about $120 million or 0.3% of matured deposits will be sufficient 99.9% of the time. It will not be appropriate or desirable to provide in advance for the very remote event of simultaneous bank failures. Providing for this in advance will send the wrong signals and could lead to moral hazard.

Dr Ahmad suggested that the Bill should provide for payouts to be taken

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within a specified period of time, say, three months. The Deposit Insurance Agency will make every effort to make depositor payout as speedily as possible. We envisage that it should be able to make payout sooner than within three months after a bank failure. But I agree it will eventually be good practice for the Deposit Insurance Agency to commit to making payouts within a specified period of time. We are new to this scheme. Let us set up the scheme and explore this issue at a further point. Other new deposit insurance schemes, such as the one in Hong Kong, also do not specify in legislation the time period within which payout has to be made. But let us consider this later.

Finally, Dr Ahmad raised the issue of legal immunity for the Deposit Insurance Agency and its officers. He felt it was over-protective and not very transparent. It is important for the Agency and its officers to be given immunity from personal liability since they are performing a public function. But the legal protection clause for the Deposit Insurance Agency and its officers does not offer blanket immunity. It only covers acts done in good faith. It does not, for instance, cover fraudulent acts or intentional and wilful misconduct. I should reiterate also that the Board of the Deposit Insurance Agency will be accountable to the Minister in charge of MAS for its acts and decisions. The financial statements of the Deposit Insurance Agency would be audited. It will be required to prepare and submit its annual report and estimates of income and expenditure of

the Deposit Insurance Fund and of the Agency itself to the Minister, and the annual report will be made available to the public.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

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The House immediately resolved itself into a Committee on the Bill. - [Mr Tharman Shanmugaratnam].

Bill considered in Committee; reported without amendment; read a Third time and passed.