MAS to phase in new limit on unsecured credit over four years, starting in June

SINGAPORE - The Monetary Authority of Singapore (MAS) will phase in a tighter limit on credit card debt and other unsecured credit facilities over four years so as to give affected borrowers more time to cut their debt.

MAS said the decision to give over-extended borrowers more time to adjust to the new measures comes after consultations with the Association of Banks in Singapore (ABS) and Credit Counselling Singapore (CCS), and feedback from the public.

Unsecured credit is borrowing that is not backed by any collateral.

In September 2013, MAS announced that financial institutions such as banks will not be able to grant further unsecured credit to someone whose outstanding unsecured debt, across all financial institutions, is more than 12 times his monthly income for three consecutive months. The rule aims to help individuals avoid accumulating excessive debt.

On Monday, MAS said that the new limit on the total amount of credit card and other unsecured debt that can be held will be implemented in phases:

- From June 1 this year, the limit will be 24 times the monthly income

- From June 1 in 2017, the limit will be 18 times the monthly income

- From June 1 in 2019, the limit will be 12 times the monthly income

Most unsecured borrowers in Singapore borrow within prudent limits, said MAS. But a small proportion of those have significant unsecured debts.

Data from financial institutions and Credit Bureau Singapore show that as of Feb this year, 32,000 borrowers will be affected by the limit to be implemented on June 1, which is 24 times the monthly income. They make up 2 per cent of the total number of unsecured credit users.

MAS said the total number of over-extended borrowers in Singapore - defined as those owing unsecured debt of more than 12 times monthly income - is 84,000, representing 5 per cent of all unsecured borrowers.

They owe a total of $7.5 billion, less than 0.4 per cent of the total banking assets of Singapore, MAS said, adding that their borrowings pose no risk to the local financial industry whose aggregate non-performing loan ratio is low, at 1.1 per cent as at Dec last year.

To help over-extended borrowers, CCS and ABS will introduce a new debt repayment solution called the repayment assistance scheme.

Said Mr Wong Nai Seng, MAS assistant managing director of policy, risk and surveillance: "All of us have to take active steps to manage our unsecured debts so that they do not become unsustainable. "Most borrowers do not spend or borrow beyond their means, but some many need help to reduce their debts gradually."

He encouraged those who need help to act early and approach their financial institutions or CCS for help.

For more information on the changes, go to

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