Debated in Parliament on 29 Feb 2016.
Ms Foo Mee Har asked the Prime Minister whether there has been a gradual easing of individual indebtedness as a result of MAS' imposition of the aggregated borrowing limit of 12 months' income.
The Monetary Authority of Singapore (MAS) announced in April 2015 that the limit on the amount of unsecured credit that a borrower can take on across all financial institutions (FIs) would be phased-in over four years. The borrowing limit was set at an initial level of 24 times a borrower’s monthly income from 1 June 2015. This will be lowered progressively to 18 times from 1 June 2017 and 12 times from 1 June 2019.
Since the introduction of the borrowing limit, the number of borrowers with unsecured debt exceeding 24 times of monthly income has approximately halved, from around 32,000 in February 2015 to around 17,000 in November 2015. This reduced number represents around 1% of all unsecured credit borrowers.
The number of borrowers whose unsecured debt exceeds 12 times their monthly income has also dropped by about 14%, from around 84,000 borrowers in February 2015 to around 72,000 borrowers in November 2015. This reduced number makes up about 4% of all unsecured credit borrowers.
The vast majority of borrowers use credit prudently and are not affected by the aggregate borrowing limit. We encourage indebted borrowers to reduce their outstanding unsecured debts over time. They can seek help from their FIs or Credit Counselling Singapore, which can help work out repayment plans and offer various assistance schemes.
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