This refers to Banking (Credit Card and Charge Card) Regulations 2013 Regulation 17 and MAS Notice 635 paragraph 17. For full details and text of the revised MAS Regulations (the “Regulations”), please visit www.mas.gov.sg

1. Why is MAS setting a limit on borrowers’ credit card/charge card and unsecured borrowings, combined across FIs?
   

   This is a more wholesome way of managing borrowers’ total unsecured debt, compared to a limit placed on/by each FI. This will also help to discourage prolonged reliance on unsecured credit and slow debt accumulation by borrowers who have already incurred significant unsecured debt.

   This rule, however, does not apply to borrowers with an annual income of at least S$120,000 or with net personal assets exceeding S$2 million.

2. What is the impact on borrowers’ credit facilities if their combined outstanding unsecured interest-bearing debt across FIs exceeds their annual income (as per the FI’s records) for 3 consecutive months or more?
   

   Borrowers will be disallowed from:

   • charging new amounts to their existing credit cards/charge cards and using unsecured credit facilities issued by the FI;
   • obtaining new credit cards/charge cards or unsecured credit facilities from the FI; and
   • obtaining credit limit increases on existing credit cards/charge cards and unsecured credit facilities issued by the FI

   Other FIs will not be required to suspend the borrower’s accounts if the borrower’s combined unsecured balances have not exceeded his annual income for 3 months or more based on their respective income records.

3. How are borrowers’ annual incomes determined?
   

   Each FI will utilise the income records provided by their borrowers, and compute the borrowers’ annual income using their internal computation methods.

   Hence, borrowers are strongly advised to update their income records with the various FIs, to avoid unnecessary disruption to use of their credit facilities.

4. How are borrowers’ combined outstanding balances computed for the purpose of this rule?
   

   FIs are only required to take borrowers’ interest-bearing unsecured balances into account. To clarify, interest-bearing unsecured balances include amounts rolled over on credit cards and outstanding balances on term loans for which interest is charged.

   Interest-bearing unsecured balances refer to amounts that attract an effective interest rate. This means that the outstanding balance on a 0% balance transfer with a processing fee will be included in the computation of total outstanding balances for this rule.

   Needs-based unsecured loans set out in Regulation 6, paragraph 9 of Banking (Credit Card and Charge Card) Regulations 2013, will be exempted from the calculation of combined outstanding balances.

5. How will FIs determine whether borrowers’ combined outstanding unsecured balances have exceeded their annual income for 3 consecutive months?
   

   FIs will use the interest-bearing unsecured balances reported to the credit bureaus for each borrower, to determine if the sum of these balances have exceeded a borrower’s annual income for 3 consecutive months.

6. What is the purpose of the 3 months period?
   

   The 3 months period is intended to be a grace period to allow borrowers who travel frequently, or who may have inadvertently omitted to pay their bills, time to make the necessary payments before their unsecured credit facilities are suspended from use.

7. When can suspensions of unsecured credit facilities be uplifted?
   

   A suspension can be uplifted only after the borrower reduces his combined interest-bearing unsecured balances to less than his annual income and after the FIs have conducted fresh credit bureau and income checks.

   Borrowers are required to submit updated income documents to the FIs when requesting for reinstatement. The purpose of conducting the credit bureau checks and obtaining updated income documents is to allow the FIs to assess the credit-worthiness of the borrower. Hence, uplifting of the suspension is subject to the FIs’ credit assessment.

8. When will the combined annual income limit take effect?
   

   The combined annual income limit will take effect on 1 June 2015. Borrowers would have up to 18 months from the time the revised rules were issued on 29 November 2013, to reduce their unsecured debts.

   The 3 months grace period will commence from 1 March 2015. Thus, if the borrowers’ combined outstanding unsecured balances exceed their annual income for 3 consecutive months starting from 1 March 2015, their unsecured credit facilities will be suspended when the rule takes effect on 1 June 2015.

9. How can borrowers determine their combined unsecured outstanding balances?
   

   From Q4 2014, borrowers can refer to their credit reports for a summary of their aggregate outstanding unsecured balances (comprising both interest-bearing and non interest-bearing balances).

   For more information on how to obtain a credit report, please refer to the websites of Credit Bureau (Singapore) Pte Ltd at www.creditbureau.com.sg and DP Credit Bureau Pte Ltd at www.dpcreditbureau.sg.

10. When can suspensions imposed on credit cards/charge cards and unsecured credit facilities as a result of this rule be uplifted?
    

    FIs are allowed to reinstate the suspended credit lines when the borrowers’ debt on all credit cards/charge cards and unsecured credit facilities extended by the FIs are no longer past due, and after conducting fresh income and bureau checks. There is no requirement for all balances to be fully paid off before the credit lines are reinstated.

    Borrowers are required to submit updated income documents to the FIs when requesting for reinstatement. The purpose of conducting credit bureau checks and obtaining updated income documents is to assess the credit-worthiness of the borrower. Hence, lifting of the suspension is subject to the FIs’ credit assessment.

11. What should affected borrowers do and where can they request for repayment plans?
    

    Affected borrowers should provide their FIs with updated income documents for assessment. They should also contact their FIs directly to request for and negotiate repayment plans.

    For further assistance, affected borrowers may contact Credit Counselling Singapore (CCS) at 1800 2255 227 (9am to 6pm, Monday to Friday, except Public Holidays).

    For more Frequently Asked Questions, please visit www.abs.org.sg

*FIs refer to Banks, Finance companies etc.