THE TEMASEK REVIEW

Written by Ng E-Jay
04 March 2009

In this harsh economic environment where jobs losses are mounting by the day, it is no surprise that unsecured liabilities such as credit card debt is ballooning and defaults are on the rise. Yet, the Monetary Authority of Singapore (MAS) and Ministry of Law have seen it fit to allow more people access to unsecured credit facilities.

In a joint press release last Wednesday, MAS and the Law Ministry announced that from March 1, the minimum annual income requirement for unsecured bank credit facilities will be $20,000, down from $30,000. Individuals will be able to borrow up to twice their monthly income.

The minimum annual income requirement for credit cards remains unchanged at $30,000 for individuals aged 55 or younger and $15,000 for those over 55.

Until now, individuals earning below $30,000 per year have been able to seek unsecured loans only from non-bank lenders such as GE Money and SingPost or other licensed moneylenders.

The purported reason given by MAS for such a move was to “allow access to unsecured credit to more individuals who may have occasional genuine borrowing needs” and to ensure “a more consistent regime” between banks and other licensed moneylenders.

In reality however, neither banks nor other lenders care whether the borrowing needs of consumers are “genuine”, using MAS’ disingenuous choice of vocabulary. Their only concern is whether the consumer is likely to default or be late in payments.

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