SINGAPORE - The Association of Banks in Singapore (ABS) announced on Monday a repayment assistance scheme to help borrowers reduce their credit card debt and other unsecured credit loans over time.
The move is in response to a tighter borrowing limit on such loans announced by the Monetary Authority of Singapore (MAS) earlier on Monday:
The MAS rule will be phased in over four years
- From June 1 this year, the limit is 24 times the monthly income
- From June 1 in 2017, the limit is 18 times the monthly income
- From June 1, 2019, the limit is 12 times the monthly income
To help those with unsecured debt more than 12 times their monthly income before June 1 this year, ABS, leading retail banks and card issuers have set up the repayment assistance scheme.
Credit Counseling Singapore (CCS) will administer this convenient one-stop service by coordinating the work needed for a centralised repayment solution.
The repayment assistance scheme is offered at a lower interest rate of 5 per cent per year, and over a period of eight years. This will help those pay down debts more than 12 times the monthly income.
Borrowers must apply for the scheme by Dec 31 this year.
Said ABS director Ong-Ang Ai Boon: "The ABS' repayment assistance scheme is an industry-led initiative to help customers affected by the new borrowing limit on unsecured credit.
"They now have a repayment assistance solution to help them reduce their debts."
She encouraged highly indebted borrowers to consider the instalment plan.
Those who are eligible for the scheme will get letters from their financial institutions in the following weeks, with information on their outstanding unsecured debt balances, details on the scheme, and application forms for those who want to sign up for the scheme.
They may also call CCS directly to obtain the scheme's forms.