SINGAPORE – The Monetary Authority of Singapore (MAS) will work with banks on how to wean businesses and individuals off the relief measures put in place during the coronavirus pandemic, its managing director Ravi Menon said.

Speaking during the release of the central bank’s annual report on Thursday (July 16), Menon said the relief measures the central bank worked with the financial sector to deploy during the pandemic have done their part to help businesses and individuals stay afloat.

But it’s time to look at the best way for businesses and individuals who have taken the relief measures, which include debt moratoriums on mortgage payments, to start paying off, he added.

“We won’t have a cliff edge effect – which means it’s not as if (the relief measures) will all be withdrawn on December 31,” he said, referring to the deadline for most relief measures.

“I don’t think (either) that we can continue these reliefs indefinitely, because the longer you extend them, the more risky some of these borrowers will be in terms of repayment,” he added.

A range of policies fall between these two extremes, but a careful balance must be struck to ensure that most debtors can repay their loans, Menon said.

The MAS chief explained that the ability of banks to lend money to other businesses will in turn be affected when lenders face large losses, although they may start from a strong capital position.

He said the central bank aims to announce the results of its analysis with banks by October to give debtors time to prepare their repayments.

“We should only decide which way to go when we have a clear understanding of the situation of the various people who made these postponements,” Menon said.

“When we implemented these measures, we didn’t have to do any studies. We just did it because we knew (the measures were going) to be necessary.”

MAS had worked with industry players, including banks and insurers, to start deploying relief measures for businesses and individuals since March 31.

The central bank announced a list of basic measures on March 31, including the ability for individuals to defer payment of home loans and payment of premiums 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 payment of the principal of their guaranteed term loans until December 31.

SMEs will always be subject to the credit rating of banks and finance companies, especially on their cash flow and loan guarantees.

The eventual repayment policy that MAS and the banks decide will be “comprehensive, which also means that it may not meet the needs of every borrower, so we must leave some discretion,” Menon said.

He noted that banks have deferred principal or interest payments or both on about 34,000 mortgages until December 31.

They also deferred payment of principal and interest on more than 2,100 renovation and education loans.

Over 6,200 applications to convert outstanding credit cards and unsecured debt into term loans at lower interest rates were also approved.

More than 3,200 car loans and hire-purchase contracts have benefited from various repayment reductions.

Payment deferrals were also made on more than 5,300 guaranteed loans from SMEs.

More than 25,000 life and health insurance policies have deferred premiums while maintaining coverage, and approximately 600 individual general insurance policies, such as vehicles, are subject to flexible installment payment plans.

Over 240 requests from SMEs for flexible payment plans for general insurance have also been approved.

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