Singapore Law Blog

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]. 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.

2. 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.

3. 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.

4. The proposals in the Consultation Paper do not signal a relaxation in the Government's policy stance towards unsecured credit. 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 apply unsecured credit rules with appropriate modifications to the moneylenders regime. 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.

5. MAS and the Ministry of Law invite interested parties to give their views and comments on the proposals contained in the Consultation Paper. Electronic submissions are encouraged.

6. A copy of the Consultation Paper is available at www.feedback.gv.sg . Please submit your written comments by 7 September 2006 to:

Prudential Policy Department
Monetary Authority of Singapore
10 Shenton Way
Singapore 079117
Fax: 62203973
Email: policy@mas.gov.sg

OR

Legal Policy Division
Ministry of Law
100 High Street #08-02
Singapore 179434
Fax: 63328842
E-mail: mlaw_lpd@mlaw.gov.sg

7. Please note that all submissions received may be made public unless confidentiality is specifically requested for the whole or part of the submission.


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[1] Financial institutions granting unsecured credit facilities or issuing credit cards to individuals are 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.