MAS, together with the Association of Banks in Singapore (ABS) and Finance Houses Association of Singapore (FHAS), announced an extension of support measures to help individuals and small and medium-size enterprises (SMEs) facing cashflow difficulties to transition gradually to full loan repayments. These extended measures will progressively expire over 2021. For individuals, these support measures include extended assistance for personal unsecured credit and debt consolidation plan. For SMEs, these support measures include partial deferment of principal payments on secured SME loans and loans under enterprise Singapore, in addition to the customized restructuring programs.
Since April 2020, banks and finance companies have been providing relief measures for individuals and SMEs amid the COVID-19 pandemic and these measures are set to expire by December 31, 2020. As economic activities continue to open up, borrowers that are able to resume paying their loan instalments in full should start doing so from January 01, 2021. However, for individuals and businesses that will continue to experience cash-flow pressures into early 2021, these extended support measures will allow more time to resume repayments. The support measures will also be available to borrowers previously not under any payment deferral, but who are now facing cash-flow challenges. The extended support measures include the following:
- Extended assistance for personal unsecured credit and debt consolidation plan—Certain individuals, such as those who face difficulty repaying their unsecured revolving credit facilities, those who can provide proof of income impact of at least 25%, and those with repayments that are between 30 and 90 days past due, may apply to their lender till June 30, 2021 to convert their outstanding balances to term loans at a reduced interest rate. Individuals on Debt Consolidation Plans, who can provide proof of income impact and with repayments that are between 30 and 90 days past due, may apply to their lender till June 30, 2021 to extend the loan tenure of their Debt Consolidation Plans for up to five years.
- Partial deferment of principal payments on secured SME loans and loans under Enterprise Singapore—SMEs in need of further relief should first consider the Extended Support Scheme—Standardized (ESS-S). Under this scheme, SMEs in Tier 1 and Tier 2 sectors may opt to defer 80% of principal payments on their secured loans granted by banks or finance companies as well as loans granted under Enterprise Singapore’s (ESG) Enhanced Working Capital Loan Scheme and Temporary Bridging Loan Program till June 30, 2021. SMEs in other sectors may opt to do the same up to March 31, 2021. This relief will be available to all SMEs that are not more than 30 days past due on all their loan payments. SMEs whose loans have been granted principal moratorium should also not have overdue interest payments for these loans. Borrowers can apply for ESS-S from November 02, 2020 onward.
- Customized restructuring programs—Banks and finance companies are also developing an Extended Support Scheme—Customized (ESS-C) to facilitate the restructuring of a borrower’s loans across multiple financial institutions. The ESS-C complements other restructuring assistance schemes under the proposed Simplified Insolvency Program (SIP) for micro and small companies and scheme for sole proprietors and partnerships (SPP scheme). The ESS-C will be available for SMEs with more than one lender for whom the SPP scheme and SIP may not be suitable. More details on the ESS-C will be provided in the coming weeks. Borrowers can apply for ESS-C from November 02, 2020 onward.
Keywords: Asia Pacific, Singapore, Banking, Credit Risk, COVID-19, Payment Deferrals, Loan Repayment, Basel, MAS
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticleEuropean Council Publishes Eurogroup Work Program Until June 2021
BIS published the September issue of the Quarterly Review, which contains special features that analyze the rapid rise in equity funding for financial technology firms, the effectiveness of policy measures in response to pandemic, and the evolution of international banking.
The Basel Committee for Banking Supervision (BCBS) met in September 2021 and reviewed climate-related financial risks, discussed impact of digitalization, and welcomed efforts by the International Financial Reporting Standards (IFRS) Foundation to develop a common set of sustainability reporting standards
The Office of the Comptroller of the Currency (OCC) issued a Cease and Desist Order against MUFG Union Bank for deficiencies in technology and operational risk governance.
The European Commission (EC) published the Delegated Regulation 2021/1527 with regard to the regulatory technical standards for the contractual recognition of write down and conversion powers.
In a response to the questions posed by a member of the European Parliament, the President Christine Lagarde highlighted the commitment of the European Central Bank (ECB) to an ambitious climate-related action plan along with a roadmap, which was published in July 2021.
The Single Resolution Board (SRB) published a Communication on the application of regulatory technical standard provisions on prior permission for reducing eligible liabilities instruments as of January 01, 2022.
The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to provide guidance to authorized deposit-taking institutions on the interpretation of APS 120, the prudential standard on securitization.
The French Prudential Control and Resolution Authority (ACPR) published the corrective version of the RUBA taxonomy Version 1.0.1, which will come into force from the decree of January 31, 2022.
The European Commission (EC) announced that Nordea Bank has signed a guarantee agreement with the European Investment Bank (EIB) Group to support the sustainable transformation of businesses in the Nordics.
The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to clarify the regulatory capital treatment of investments in the overseas deposit-taking and insurance subsidiaries.