1 Overview and Definitions
1.1 The Monetary Authority of Singapore (MAS) has a long-standing policy of not encouraging the internationalisation of the Singapore dollar (S$). This stems from the MAS' use of the exchange rate as the principal tool of monetary policy. The policy is aimed at ensuring that the growth of the S$ market is commensurate with the development of the economy and that the effective conduct of MAS' monetary policy is not compromised.
1.2 This Notice governs insurance companies on the lending of S$ to non-residents. For the purposes of this Notice, residents are:
- companies which are at least 50% owned by Singapore citizens; and
- financial institutions (FIs) in Singapore that are governed under MAS Notice 109 or equivalent Notices.
All entities that do not fall within the definition of a resident outlined above are considered non-residents.
1.3 The restrictions in this Notice do not apply to individuals and non-financial entities, including corporate treasury centres. The restrictions in this Notice apply only to non-resident financial entities, which include:
(a) banks
(b) merchant banks
(c) investment banks
(d) finance companies
(e) insurance companies
(f) securities dealers
(g) asset/fund management companies
(h) hedge funds
(i) money, futures, and prime brokers
(j) other classes that the MAS may prescribe.
1.4 Notwithstanding the provisions in this Notice, which relate to the non-internationalisation of the S$, insurance companies are not allowed to engage in financial activities outside the scope of their licences, or in any way contravene the provisions of the Insurance Act and any other MAS guidelines.
2 S$ Credit Facilities
2.1 For the purposes of this Notice, S$ credit facilities include loans, contingent credit lines, and foreign exchange (FX) swaps involving a spot sale of S$ to a non-resident in the first leg.
2.2 Insurance companies may lend S$ to non-resident financial entities for any purpose whether in Singapore or overseas as long as the aggregate S$ credit facilities do not exceed S$5 million per entity1.
2.3 Where amounts exceed S$5 million per entity, the following conditions apply:
(a) Where the S$ proceeds are to be used outside Singapore, insurance companies must ensure that the S$ proceeds are swapped or converted into foreign currency upon draw-down.
(b) Insurance companies should not extend S$ credit facilities to non-resident financial entities if there is reason to believe that the S$ proceeds may be used for S$ currency speculation.
2.4 Insurance companies are required to report to the MAS on a monthly basis, the aggregate nominal amount of such transactions with non-residents outside Singapore in the format in Appendix I (PDF, 4.86KB). No submission is required for the month if there are no such transactions during the month. All information required in Appendix I should be submitted to the Monetary Management Division (MMD), MAS no later than 10 working days after the reporting month. Insurance companies should keep documentary evidence supporting these S$ credit facilities for audit and inspection purposes.
3 Consultation Procedure
3.1 Should insurance companies need to consult the MAS, they may write to:
Monetary Management Division, MAS
10 Shenton Way, MAS Building
26th Floor
Singapore 079117
Fax: 62299491
E-mail: sgddiv@mas.gov.sg
3.2 Insurance companies should keep documentary evidence supporting these S$ credit facilities for audit and inspection purposes.
Appendix I: Format for Monthly Report
(4.86KB)
1 For FIs seeking to obtain S$ credit facilities, each subsidiary is considered a separate entity while the Head Office and all overseas branches are collectively regarded as one entity.
