This notice is issued pursuant to section 64 of the Insurance Act (Cap.142) ["the Act"] and applies to all direct insurers.
Definitions
2 In this notice -
"direct insurer" has the same meaning as set out in section 1A of the Act;
"education loan" means a loan where the proceeds are applied towards defraying education expenses such as tuition fees, college accommodation, college meal expenses, textbooks and computer equipment.
3 Subject to paragraphs 4 and 5, all direct insurers shall comply with the following requirements when granting unsecured credit facilities to individuals in Singapore:
(a) Unsecured credit facilities shall only be granted to an individual if that individual has an annual income of $30,000 or more; and
(b) The aggregate of the amounts of all unsecured credit facilities which may be granted by a direct insurer to an individual on one or more occasions shall not exceed twice his monthly salary.
4 The amount of unsecured credit facilities that may be granted to joint borrowers shall not exceed the aggregate of the amounts of unsecured credit facilities that the borrowers severally could have obtained under this Notice.
5 The requirements in paragraphs 3 and 4 shall not apply to the following:
(a) Unsecured credit facilities granted through credit or charge cards;
(b) Bridging loans, subject to the requirements of MAS Notice 116;
(c) National Service Bonds to the Ministry of Defence for the deferment of National Service liabilities;
(d) Security bonds to the relevant authorities for the employment of foreign domestic workers;
(e) Education loans, provided that the direct insurer takes reasonable steps to ensure that the proceeds of education loans are applied to defray only education expenses;
(f) Loans to which section 32(1) of the Act applies;
(g) Renovation loans, provided that -
(i) the amount of financing does not exceed 6 times the monthly salary of the borrower or $30,000, whichever is lower;
(ii) for joint borrowers, the amount of financing does not exceed the aggregate of 6 times the monthly salaries of the joint borrowers or $30,000, whichever is lower, and each of the other joint borrowers is a spouse, parent or sibling of the first joint borrower;
(iii) the direct insurer obtains documentary proof of such renovations; and
(iv) the loan repayment period does not exceed 5 years.
(h) Loans to sole proprietorships and partnerships for business purposes.
6 This notice does not affect the requirements of any other written law pertaining to unsecured credit facilities.
7 The following Circulars are cancelled with immediate effect:
(a) MAS Circular Nos. 1/95 and L2/95 dated 10 February 1995;
(b) MAS Circular Nos. 2/95 and L3/95 dated 15 February 1995; and
(c) MAS Circular Nos. 4/95 and L4/95 dated 22 February 1995.
8 This Notice shall take effect on 3 April 2003.
