SINGAPORE – Singapore’s new digital banks backed by Grab Holdings and Sea are asking the country’s central bank to lift a cap on deposits that they see as hamstringing their growth.
Both banks are approaching the $50 million limit and have been lobbying the Monetary Authority of Singapore (MAS) to review its stance, according to people with knowledge of the matter. They expect to hear an update on this issue soon, the people said, asking not to be identified as the discussions are confidential.
While the deposit cap during the lenders’ first two years of operation is meant to safeguard consumers’ interests, the new entrants see the restriction – which has meant applications for their savings accounts are by invitation only – as curbing their lending ability.
Time is also ticking for these digibanks owned by non-financial firms to boost scale, given that they had to show a path towards profitability within five years during their application process.
Meanwhile, against a backdrop of Singapore banks mopping up deposits amid a glut, rival digibank Trust Bank is raking in the money. Backed by Standard Chartered Bank, it does not face the same deposit restriction. Trust Bank said in May that its deposit balances were more than $1 billion nine months after its launch, and it aims to break even by 2025.
A spokesman for Grab’s GXS Bank said the firm neared the regulatory cap “within months” of launching its savings account, and the wait list to open such an account “continues to grow organically every day”.
The bank, which also introduced a loan product in April, has been improving its infrastructure to ensure it can scale up quickly and securely, according to the spokesman. It has been engaging MAS on its progress, the spokesman said.
Sea declined to comment.
MAS referred Bloomberg News to its previous statements for digital banks. In those statements, it stated that the safeguards, including deposit caps, are to mitigate the risk of untested business models and minimise costs to retail depositors and the financial system in the event of operational incidents or a failure.
Grab’s digital bank, which is also backed by Singtel, was set up just under a year ago. The firm states on its website that each invited depositor can put in up to $5,000 in a savings account and it is working on raising the limit as soon as possible.
Sea’s MariBank, the only other holder of a digital full bank licence in Singapore, started deposit-taking with its employees in 2022 and expanded to lending to businesses in June. Its offerings are on an invitation-only basis for users of its Shopee marketplace app.
Trust Bank, 60 per cent owned by StanChart, said in its May statement that it will continue to grow its products. BLOOMBERG
