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SINGAPORE (BLOOMBERG) – The Monetary Authority of Singapore (MAS) is in discussions with lenders about extending the Republic’s debt default program beyond December 31 to provide additional relief to borrowers affected by the consequences. of the coronavirus pandemic, according to people with knowledge of the import.
One of the key measures that the MAS and local banks are discussing is the possibility of extending the debt relief program with the industries that have been most impacted by the crisis with the possibility of the aid being extended for up to six months the people said, asking not to. Identify yourself because the conversations are confidential.
A tiered approach is being considered, so relief is aimed at those who need help the most, one of the people said. Details of the plan and what types of borrowers will be covered by an extension are still being finalized, they said.
Under current measures announced in March, small and medium-sized businesses can choose to postpone principal payments on their guaranteed term loans until the end of the year. Consumers can defer principal and interest payments on residential mortgages. People who suffer a loss of income can request a lower interest rate for unsecured credit.
An extension of the debt moratorium would help mitigate the so-called “cliff effect” on consumers and businesses once relief measures end. Authorities are using fiscal and monetary tools to provide support against what could be a record recession that came with the pandemic. The government introduced additional support measures of $ 8 billion last month to cushion the hit from the virus, raising Singapore’s total pledged pandemic aid to more than $ 100 billion.
FACILITATE BACK
MAS Managing Director Ravi Menon said in July that the regulator was talking with banks and finance companies about how to make it easier for borrowers to gradually resume payments once debt relief measures expire.
“We want to avoid the ‘cliff effects’ of a sudden withdrawal of these relays,” Menon told reporters during the release of the MAS annual report. The central bank has relaxed monetary policy to help stabilize the economy and has ensured ample liquidity in financial institutions. He also asked Singaporean banks to prioritize loans by limiting their dividend payments.
While Singapore’s coronavirus infection rate is declining and authorities are trying to gradually reopen the economy, many restrictions on business and travel remain in place.
Like their global competitors, Singapore’s biggest lenders, DBS, OCBC, and UOB, are bracing for a wave of sour debt. Collectively, they have set aside about $ 4 billion in provisions for general and problem loans in the first half of the year, according to data tracked by Bloomberg Intelligence analyst Rena Kwok.
As of June 30, debt relief programs accounted for about 5 percent of DBS’s total loan book, 10 percent of OCBCs and 16 percent of UOBs, according to its second-quarter results.
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