The Monetary Authority of Singapore (MAS) on Friday said it would tighten borrowing rules for Singaporeans heavily in debt from January 1.
Under the new measure, where an individual's outstanding unsecured debts exceeds six times their monthly income, a financial institution will not be allowed to grant any increase in credit limit or any new unsecured credit facilities, that will cause the individual's total credit limit to exceed 12 times their monthly income.
Borrowers can continue to draw on their existing un-utilised unsecured credit facilities. The new measure will not require borrowers to reduce the credit limit of their existing credit facilities, it said in a statement.
The move aims to help borrowers with outstanding unsecured debts of between six and 12 months of their monthly income. There are an estimated 60,000 borrowers in this pool, making up around 4 percent of the total number of unsecured credit users.
The industry-wide borrowing limit prevents an individual from obtaining new unsecured credit and drawing down on his existing unsecured credit facilities once his aggregate interest-bearing unsecured debts exceed the prevailing borrowing limit for three consecutive months.
The borrowing limit is currently 18 times a borrower's monthly income. It will be lowered to 12 times from June 1, 2019.