Citibank Singapore giving instant in-principle nod for debt consolidation plan

Customers applying online for Citibank Singapore's debt consolidation plan can now get instant in-principle approval if they are eligible, instead of waiting up to three days for a decision after applying through e-mail or post.

The bank said in a statement on Monday that it is the first in Singapore to offer such a service. The customer's credit situation is assessed through a fully automated process, and those given in-principle approval can then submit their supporting documents, which are required by industry regulations.

Mr Vikas Kumar, Citibank's head of cards and personal loans, said: "The ability to grant instant in-principle approval resolves a key customer pain point by giving customers a better sense of their applications' eventual outcome, even before they go through the effort of gathering their financial documents and sending them to the bank."

Debt consolidation plans were introduced by financial institutions in January 2017 to help borrowers reduce their debt over time. The plans consolidate a borrower's existing unsecured credit balances across various institutions under a single entity and offer effective interest rates that are lower than credit card and credit line rates.

Customers on debt consolidation plans will have lower monthly repayments - as compared with the total individual payments a customer incurs - and the benefit of making repayments to a single bank.

The service comes before new borrowing limits kick in. From June 1, the Monetary Authority of Singapore will tighten the borrowing limit for unsecured credit to 12 times a borrower's monthly income. So someone whose outstanding unsecured debt exceeds 12 times his income for three straight months cannot be granted further unsecured credit.

A version of this article appeared in the print edition of The Straits Times on April 17, 2019, with the headline 'Instant in-principle nod for debt consolidation plan'. Print Edition | Subscribe