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MAS and the Ministry of Law have jointly
released a consultation paper entitled: 'Joint Public Consultation Paper
on Unsecured Credit Rules'. |
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Currently, financial institutions granting
unsecured credit facilities or issuing unsecured credit cards to
individuals are required by MAS to abide by a set of unsecured credit
rules [1]. |
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These rules were put in place to implement
the Government's social policy of discouraging individuals from spending
beyond their means by curbing the easy access to credit through
financial institutions. |
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The moneylenders regime, which is supervised
by the Ministry of Law, does not have similar unsecured credit rules
applying to both licensed moneylenders and exempted moneylenders that
grant unsecured personal loans to the public. |
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The key recommendations in the Consultation
Paper include: |
- To lower the minimum income threshold
for unsecured credit facilities to $20,000 from $30,000. The minimum
income requirement for credit cards remains at $30,000.
- To set the maximum aggregate credit
limit of all unsecured personal credit facilities and credit cards
granted by a financial institution at four times monthly income for
individuals with at least $30,000 in annual income. For individuals
with annual income of at least $20,000 and below $30,000, the maximum
aggregate credit limit will be twice their monthly income.
- To apply the unsecured credit rules
proposed by MAS to the moneylenders regime with appropriate
modifications. For instance, under the moneylenders regime, for
unsecured loans exceeding $3,000, income checks are mandatory and
applicants must have an annual income of at least $20,000. For
unsecured loans of $3,000 and below, mandatory income checks are not
required as no minimum income requirement would be imposed.
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The proposals in the Consultation
Paper do not signal a relaxation in the Government's policy stance
towards unsecured credit. |
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They are intended to update MAS'
existing unsecured credit rules given the developments in the
financial industry, especially in the area of risk management, and
to introduce appropriate unsecured credit rules into the
moneylenders regime. |
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The common application of such rules
to both financial institutions and moneylenders will ensure a more
consistent regime for granting of unsecured credit in Singapore. |
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MAS and the Ministry of Law
invite interested parties to give their views and comments on the
proposals contained in the Consultation Paper.(Click
here to view the consultation paper.) The Consultation Paper
can be viewed online at the Government Consultation Portal at:
feedback.gov.sg/asp/ocp/ocp01d1.asp?id=346 |
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The consultation period will end on 7
September 2006. |
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1
Financial institutions granting unsecured credit facilities or
issuing credit cards to individuals are currently required to
ensure that these individuals have a minimum annual income of at
least $30,000. The maximum unsecured credit that can be granted to
an individual in the form of an unsecured credit card is twice his
monthly income, with an additional and separate limit of the same
amount in the form of other unsecured credit facilities. |
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Source:
www.mas.gov.sg Press Release 7
Aug 2006 |
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FrontPage Edition: Mon 7 August 2006
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