MAS: Changes to finance company regulations, enhancing ability to finance SMEs

The Monetary Authority of Singapore (MAS) announced regulatory changes starting this year to strengthen the flexibility of finance companies and enhance their ability to provide financing to small and medium sized enterprises (SMEs).

This is a relaxation of business restrictions with enhanced prudential standards, MAS said on its press release on 14 Fabruary.

Mas said finance companies often provide more personalised and customised solutions for smaller-sized businesses in particular. To enhance finance companies’ role in SME financing, MAS will relax some business restrictions that currently apply to them.

The limit on a finance company’s aggregate uncollateralised business loans will be raised to up to 25 percent of its capital funds, from the current 10 percent. The limit on uncollateralised business loans to a single borrower will also be raised to up to 0.5 percent of capital funds, from the current S$5,000. “These changes will better enable finance companies to serve their SME customers, many of whom require unsecured credit for working capital needs,” MAS said.

Finance companies can offer current account and chequing services to their business customers. They also can join electronic payment networks, including Inter-bank GIRO, Fast and Secure Transfers (FAST) and Electronic Funds Transfer at Point of Sale (EFTPOS). MAS noted these changes will enable finance companies to provide more comprehensive credit and deposit services to SMEs.

However, MAS will retain

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