Parliamentary Replies
Published Date: 21 July 2008

Reply to PQ on Finance Companies Repossessing Cars

Question No. 28
Order Paper No. 52 of 2008
For Written Answer

Date: For Parliament Sitting on 21 July 2008

Name and Constituency of Member of Parliament
Mr Lim Biow Chuan, MP for Marine Parade GRC


Question Q28: To ask the Senior Minister (a) whether the Ministry is able to provide the number of cars which have been repossessed by finance companies in the last 3 years; and (b) whether there are plans to curb excessive lending by finance companies/institutions for the purchase of cars.

Mr Tharman Shanmugaratnam, Minister for Finance:
1. The number of cars which have been repossessed by finance companies  regulated by the MAS has declined in the last 3 years, from about 1,100 in 2005 to 290 in 2007.

2. Banks and finance companies consider the credit worthiness and debt servicing ability of the borrowers and the value of the collateral before approving each loan application.  Financial institutions are also subject to their own management and board oversight.  As part of ongoing supervision, MAS requires that banks and finance companies put in place appropriate risk management practices that are commensurate with the risk profile of the activities undertaken.

3. Non-performing car loans granted by financial institutions regulated by MAS have been declining since 2003 and there is currently no indication that borrowers are taking on unsustainably large loans. Even though the current indicators are not worrying, MAS will continue to emphasise to banks and finance companies the need to uphold prudent lending standards that take into account the credit worthiness of the borrower, the borrower's debt servicing ability and the value of the collateral.

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