SINGAPORE – The Monetary Authority of Singapore (MAS) will work with banks on how to wean companies and individuals off the relief measures rolled out during the coronavirus pandemic, said its managing director Ravi Menon.
Speaking at the release of the central bank’s annual report on Thursday (July 16), Mr Menon said that the relief measures the central bank worked with the financial industry to roll out during the pandemic have done their part to help companies and individuals stay afloat.
But it is time to study how best for companies and individuals that have taken up the relief measures, which include debt moratoriums on mortgage payments, to start making their repayments, he added.
“We will not have a cliff effect – which means it’s not as if (the relief measures) will all be withdrawn Dec 31,” he said, referring to the deadline for most of the relief measures.
“I (also) don’t think we can continue these reliefs indefinitely, because the longer you continue them, the more at risk some of these borrowers will be in terms of repayment,” he added.
A range of policies lay between these two extremes, but a careful balance needs to be struck to ensure that most debtors can repay their loans, Mr Menon said.
The MAS chief explained that banks’ ability to lend money to other companies will in turn be affected when lenders have to take large losses, though they may start off from a strong capital position.
He said that the central bank aims to announce the results of its analysis with the banks by October to give debtors time to prepare for their repayments.
“We should only decide on the way forward when we’ve clearly understood the situation of the various people who have made these deferments,” Mr Menon said.
“When we implemented these measures, we didn’t have to do any study. We just did it because we knew (the measures were) going to be necessary.”
The MAS had worked with industry players, including banks and insurers, to start rolling out relief measures for companies and individuals since March 31.
The central bank announced a list of baseline measures on March 31 that included allowing individuals to defer payment of property loans and premium payments for life and health insurance plans.
Small and medium-sized enterprises (SMEs) that continue to pay interest and are in good standing with their banks and finance companies can choose to defer principal payments on their secured term loans up to Dec 31.
The SMEs will still be subject to banks’ and finance companies’ credit assessment such as on their cash flow and loan collateral.
The eventual repayment policy that the MAS and banks decide on will be “across the board, which also means it may not meet the needs of every single borrower, so we have to allow some discretion”, Mr Menon said.
He noted that banks have deferred payments on principal or interest or both on about 34,000 mortgage loans until Dec 31.
They have also deferred both principal and interest payments on more than 2,100 renovation and education loans.
More than 6,200 applications to convert outstanding credit card and unsecured debt to term loans at lower interest rates have also been approved.
More than 3,200 motor vehicle loans and hire-purchase agreements have benefited from a variety of repayment reliefs.
Payment deferments have also been made on more than 5,300 SMEs’ secured loans.
More than 25,000 life and health insurance policies have deferred their premiums while maintaining coverage, and about 600 individual general insurance policies, such as for vehicles, are under flexible instalment payment plans.
More than 240 SME applications for flexible instalment plans for general insurance have also been approved.
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