Illustrative image (Source: fintechnews.sg) Singapore (VNA) – The MonetaryAuthority of Singapore (MAS) on February 14 announced changes to strengthen theresilience of finance companies and enhance their ability to provide funding tosmall- and medium sized enterprises (SMEs).
The decision is expected to increasefinancial channels, meeting the demand of young businesses with high growth andhope to innovate through technology infrastructure, in line with recentrecommendations proposed by the Committee on the Future Economy.
Under the new regulation, the limit on afinance company’s aggregate uncollateralised business loans will be raised to25 percent of its capital funds, from the current 10 percent. The limit onuncollateralised business loans to a single borrower will also be raised to 0.5percent of capital funds.
These changes will better enable financecompanies to serve their SME customers, many of whom require unsecured creditfor working capital needs, stated the MAS.
The decision is expected to increasefinancial channels, meeting the demand of young businesses with high growth andhope to innovate through technology infrastructure, in line with recentrecommendations proposed by the Committee on the Future Economy.
Under the new regulation, the limit on afinance company’s aggregate uncollateralised business loans will be raised to25 percent of its capital funds, from the current 10 percent. The limit onuncollateralised business loans to a single borrower will also be raised to 0.5percent of capital funds.
These changes will better enable financecompanies to serve their SME customers, many of whom require unsecured creditfor working capital needs, stated the MAS.
Besides, finance companies will be able toprovide more comprehensive credit and deposit services to SMEs, since they willalso be allowed to join electronic payment networks, including Inter-bank GIRO,Fast and Secure Transfers (FAST) and Electronic Funds Transfer at Point of Sale(EFTPOS).
To safeguard prudential standards, the MASwill also require finance companies to enhance their corporate governance andrisk management, including stricter rules on related party transactions andlimits on exposures to the property sector.
Currently, Hong Leong Finance, SingInvestments and Finance and Singapura Finance are three licensed financecompanies by the MAS with around 16 billion SGD (11 billion USD) in combinedassets. Those companies accounted for seven billion SGD (about five billionUSD) of outstanding SME loans, by the second quarter of 2016.-VNA
To safeguard prudential standards, the MASwill also require finance companies to enhance their corporate governance andrisk management, including stricter rules on related party transactions andlimits on exposures to the property sector.
Currently, Hong Leong Finance, SingInvestments and Finance and Singapura Finance are three licensed financecompanies by the MAS with around 16 billion SGD (11 billion USD) in combinedassets. Those companies accounted for seven billion SGD (about five billionUSD) of outstanding SME loans, by the second quarter of 2016.-VNA
VNA
