Singapore

Individuals can apply to banks, insurers to defer payments

Individuals can apply to defer property loan, insurance premium payments; local SMEs to get cash flow support

Individuals can apply to their banks and insurers to defer repayment of property loans and premium payments for life and health insurance plans, as part of a package of measures announced by the Monetary Authority of Singapore (MAS) to ease the financial strain from the Covid-19 outbreak.

The package, announced yesterday, also offers cash flow support to small and medium-sized enterprises (SMEs) by ensuring continued access to bank credit and insurance cover.

"In the months ahead, many individuals and SMEs in Singapore will continue to face challenges in managing their cash flows and meeting their financial obligations, such as loan repayments and insurance premiums," said the MAS.

The regulator worked with the Association of Banks in Singapore, the Life Insurance Association, the General Insurance Association and the Finance Houses Association of Singapore on the measures.

"Uncertainty about the trajectory of the pandemic and the depth and duration of an economic recession have also created strains in financial markets globally, which can in turn accentuate the economic crunch," the central bank said.

Measures announced yesterday for individuals include allowing them to defer either principal payment or both principal and interest payments on their residential property loans until Dec 31. Housing loans make up about three-quarters of consumer lending.

INTEREST

Interest will accrue only on the deferred principal amount, and no interest will be charged on the deferred interest payments, the MAS said. Applicants do not need to show that they had been hit by the fallout from the Covid-19 outbreak but they must not have been in debt for more than 90 days when applying for the relief.

Those with unsecured loans who have suffered a loss of a quarter or more of their monthly income after Feb 1 can apply to convert their outstanding balances into term loans at a reduced rate of interest capped at 8 per cent, far lower than the 26 per cent typically charged on credit cards.

Life and health insurance policyholders can apply to defer premium payments for up to six months while maintaining insurance coverage. General insurance policyholders, such as for property and vehicles, may apply to their insurers for instalment payment plans too.

SMEs can choose to defer principal payments on their secured term loans up to Dec 31, subject to banks' and finance companies' assessment of the quality of the SMEs' security. They can also extend the tenure of their loans up to the corresponding period of deferment.

This option is open to SMEs that continue to pay interest and are in good standing with their banks and finance companies, MAS said, estimating that some $40 billion of loans are likely to qualify for this relief scheme.

Applications open today for insurers, and April 6 for banks.

BUSINESS & FINANCE