SINGAPORE - The consumer credit situation in Singapore is on the whole in a healthy state, said Finance Minister Tharman Shanmugaratnam on Tuesday at an event to mark the Credit Counselling Singapore's (CCS's) 10th anniversary.
He however highlighted that there are some individuals and families who have over-extended themselves and will be at risk when interest rates rise.
Mr Tharman, who is also Deputy Prime Minister and chairman of the Monetary Authority of Singapore (MAS), noted that there is a small group of borrowers who have incurred unsustainable credit card and unsecured debts. MAS estimates that about 3 per cent of unsecured credit borrowers have accumulated unsecured debts that exceed their annual incomes.
Mr Tharman pointed out that the Government is working with the financial industry to tighten credit standards, help those already indebted to pay down their debts and educate the public.
He added that more will be done to help those pay down debts, for example, through a centralised repayment solution. Under the system borrowers do not have to approach multiple creditor banks to negotiate how to reduce their debts. Instead non-profit group CCS will help them by coordinating across all of a borrower's creditor banks and work out a centralised repayment plan.
More people have been seeking help to clear their debts as the amount owed rose significantly. For the first eight months this year, 1,509 people sought help from CCS.
It is more than double the average number of 650 debtors who sought help annually from CCS in the first five years of its existence from 2004 to 2008.
This year's figure is also above the average number of 1,377 who sought help annually in the last five years from 2009 to 2013.
The amount owed has also risen substantially over the years, with the average outstanding debt owed by distressed debtors who sought help at CCS growing to $94,765 in the first eight months this year, up 22 per cent from the average amount of $77,807 owed in 2004.
CCS president Kuo How Nam said the statistics do not indicate that Singapore's debt situation is worsening. He attributed the increase in the number of people seeking help to greater awareness of CCS' services.
Mr Kuo also said the growth in average outstanding debt is due to rising income and expenditure.