The Deposit Protection Scheme has been operating smoothly since its inception last year and needs no adjustment, Secretary for Financial Services & the Treasury Prof KC Chan says.

He told legislators today the scheme fund reached $374 million in March and is expected to reach the targeted $1.3 billion as scheduled in three years. He said it has enhanced public confidence in placing deposits with small and medium banks.

According to an opinion survey the Deposit Protection Board commissioned in June, 50% of respondents considered bank deposits more secure after the scheme's introduction and 65% found greater confidence in placing deposits with small and medium banks.

Prof Chan said although competition in the local banking industry is intense, the board has received no comment on or complaint about banks passing the cost of the scheme on to depositors.

Under the existing scheme compensation up to a maximum of $100,000 will be paid to each eligible depositor in case of failure of a member bank. Prof Chan said the limit was determined after extensive consultation and the board considers there is no need to adjust it.