Explainers
Published Date: 30 May 2017

Granting Non-Card Unsecured Credit Facilities

Financial institutions (FIs) must ensure that individuals meet the minimum criteria before granting non-card unsecured credit facilities to them.

Overview

Financial institutions (FIs) must ensure that individuals meet the minimum criteria before granting non-card unsecured credit facilities to them.

Regulatory credit limits are in place to ensure that individuals do not borrow beyond their means.

Note: A borrower's credit limit with an FI can exceed the regulatory limit if they are refinancing an existing debt owed to another FI.

Minimum Income Requirement

FIs can grant non-card unsecured credit facilities only to individuals with annual income of at least $20,000.

Note: Income can include non-employment income such as rental income.

Regulatory Credit Limit

The regulatory limit on unsecured credit (across both unsecured credit cards and non-card credit facilities) varies based on the borrower's annual income. The regulatory credit limit is:

Annual income Regulatory credit limit

< S$30,000

Up to 2 months’ income

≥ S$30,000 to < S$120,000

Up to 4 months’ income

≥ S$120,000
(or net personal assets of at least S$2 million, or net financial assets of at least S$1 million)

No regulatory limit

Excluded Credit Facilities

Loans granted for the following purposes are not affected by the minimum income requirement on non-card unsecured credit facilities:

  • Education
  • Business
  • Renovation
  • Medical

Refer to paragraph 7 of Notice 635 (349.2 KB) for full details.

Borrower's Consent for Setting Credit Limit

When setting the credit limit on a new credit card or unsecured credit facility, FIs must either:

  • Ask the borrower what their preferred credit limit is.
  • Get the borrower’s consent for the credit limit amount.

This ensures borrowers are granted credit limits that they are comfortable with, for security reasons and protection against overspending.