Thursday August 10, 2006

MAS, Law Ministry propose changes to unsecured credit rules

channelnewsasia.com :

The Monetary Authority of Singapore (MAS) and the Law Ministry have proposed several changes to unsecured credit rules. Currently, financial institutions such as banks have to comply with MAS's set of unsecured credit rules, but moneylenders do not. Under the proposed changes, moneylenders will also have to comply with the rules with appropriate modifications.

Both moneylenders and banks may benefit from one of the key recommendations: lowering the minimum income for unsecured credit facilities to S$20,000 from S$30,000. The minimum income requirement for credit cards remains at S$30,000. Another proposal is for those earning at least S$30,000 a year to be allowed a maximum credit limit of four times their monthly income - while those with an income of between S$20,000 and S$30,000 will have a limit twice their monthly income.

The MAS and Law Ministry are inviting comments to a consultation paper on the new rules. The consultation paper can be accessed online at the Government Consultation Portal. The consultation period will end on 7 September.

channelnewsasia.com :

More than 45% of those took part in Channel NewsAsia's online poll felt that there would be more bad debt if lower-wage earners got access to the unsecured credit facilities, meaning they do not have to put up any collateral for taking out loans. This view is shared by industry observers.

Some 460,000 people will immediately qualify to take out unsecured loans, if the new rules are adopted. This means banks will potentially have a 20% rise in customers for such loans. Based on a minimum S$20,000 annual income, and twice the monthly income for those who qualify, the extra amount of loans that banks can give could amount to more than S$1.5 billion.

- More easy credit. As if anticipating this move, I've noticed that the banks have been stepping up their "credit line account" efforts (/spam) recently.

(2006-08-10 13:21:35 SGT) [Biz] Permalink

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