NEW BORROWING LIMITS
On Monday, the Monetary Authority of Singapore (MAS) announced that it will relax the borrowing limits that it introduced in 2013 and phase it in to give affected people more time to gradually reduce their debts.
MAS will phase in the borrowing limit over four years:
From June 1:
24 times the monthly income
From June 1, 2017:
18 times the monthly income
From June 1, 2019:
12 times the monthly income
In September 2013, MAS had announced that financial institutions would not be allowed to grant further unsecured credit to a borrower whose total outstanding unsecured debt exceeds 12 times his monthly income for three consecutive months.
The rule aimed to help individuals avoid accumulating excessive debt.
NEW REPAYMENT SCHEME
A new repayment assistance scheme was also introduced on Monday to help borrowers reduce their unsecured debts over time.
Those with unsecured debt exceeding 12 times of their monthly income can pay off their debt at a lower interest rate of 5 per cent and over eight years.
Non-profit group Credit Counselling Singapore will coordinate the scheme.