FINANCE Minister Tharman Shanmugaratnam has assured Parliament that the rise in consumer loans is not a cause for concern.

He said that while consumer loans have increased by 10 per cent in September compared to a year ago, it is in line with the economic growth and property boom in recent years.

However, he said the 'fairly significant growth' in credit card loans of 18 to 19 per cent, even if in line with economic growth, should be watched carefully.

Responding to Marine Parade GRC MP Seah Kian Peng's question on whether the growth of personal debt in the last 12 months would warrant a review of the eligibility criteria for personal credit lines, Mr Tharman said: 'MAS' current rules are not too loose and are stricter than most countries.'

Currently, credit card applicants must meet an annual income requirement of $30,000, while the maximum credit limit on a credit card is twice the holder's monthly income.

Other unsecured credit loans are also capped at twice the borrower's monthly income.

Mr Tharman added: 'We would, of course, be concerned if financial instituions are lending without regard to credit standards and risk assessment and if borrowers are taking credit without considering if they can afford it.'

'But the prudential lending criteria employed by institutions and required by MAS addresses these concerns by maintaining sound lending standards at all times.'

The bulk of the growth in consumer loans was due to a rise in housing loans, which Mr Tharman said was 'not surprising given the buoyant property market in 2006 and 2007'.

Other forms of secured credit ,such as car loans, have increased 'marginally', while shared financing has fallen, he said.

For unsecured credit to individuals, the total oustanding of balances on credit and charge cards rose over the past year, consistent with the growth in previous years.