Tharman Shanmugaratnam: Credit Counselling Singapore – ten years of helping individuals recover from debt problems Address by Mr Tharman Shanmugaratnam, Chairman of the Monetary Authority of Singapore, at Credit Counselling Singapore 10th Anniversary, Singapore, 28 October 2014. *  *  *  Mr Kuo How Nam, President of Credit Counselling Singapore, Pioneers of CCS, Distinguished Guests, Ladies and Gentlemen, 1 Good afternoon. I am very happy to be part of CCS’ 10th anniversary celebrations today. I commend CCS and its pioneers for your contributions in helping distressed borrowers over the past 10 years. 2 CCS has come a long way from its modest beginnings in 2004. It has grown in strength, winning the confidence and trust of the people it has counselled as well as the banking industry. This is the result of the dedication of CCS’ leaders, staff and volunteers. 3 I would like especially to thank Mr Kuo How Nam, who as CCS President led and inspired the CCS team, and worked doggedly to establish partnerships with banks and other organisations. He has shaped the CCS of today – a credible source of inputs to Government on matters to do with individual credit, and a valuable partner for the financial and social services sectors.
Enhancing financial well-being of borrowers 14 We want to help everyone to manage their finances well. The Government, financial industry and CCS are working together on a three-pronged approach. Thrust one: tightening credit standards 15 First, we have to avoid excessive borrowing in the first place, which is why MAS has introduced tighter credit standards. (a)  1  2  In June this year, the data in the consumer credit bureaus was enhanced to include information on the total amount of debts that an individual has across financial institutions. This enables financial institutions to make a more realistic assessment of an individual’s repayment capacity, before they grant a new credit card or unsecured credit facility, and before they increase the credit limits on such facilities. MAS imposes minimum income requirements and also limits the amount of credit that each bank can extend to individuals. BIS central bankers’ speeches  (b)  From June next year, financial institutions will not grant further unsecured credit to a person if his total unsecured debt across all financial institutions exceeds his annual income, for three consecutive months. This cap on further credit is to help individuals avoid accumulating unsustainable debts. MAS had announced this last year and provided for a transition period of 18 months to allow time for borrowers to adjust. However, even when the rule takes effect, financial institutions are encouraged to give borrowers time to repay their existing debts gradually. 16 The Government is also strengthening other social safeguards to protect higher risk borrowers.