SINGAPORE: More people are seeking help from Credit Counselling Singapore (CCS) on their debt problems.
In the first six months of this year, more than 700 people sought help from the organisation.
This is an increase of 40 per cent, compared to about 500 people who sought help in the same period last year.
To help those at risk of credit problems, the organisation suggested that the Monetary Authority of Singapore (MAS) tighten the criteria for individuals in their applications for unsecured credit facilities.
This refers to credit extended only on the basis of the debtor’s promise to repay, without any collateral security.
In line with MAS regulations, a bank can grant such loans of up to four months of a person’s pay.
CCS highlighted that with about 13 banks and credit card companies in Singapore, a person may be able to obtain loans from more than one institution.
There is thus a possibility that an individual can obtain unsecured credit facilities worth 52 months of their salaries.
This is a relatively large amount and could put individuals in debt if not used carefully.
To address this, CCS suggested limiting how much a person can borrow in total instead.
Tan Huey Min, general manager at CCS said: "Instead of limiting the banks to four months, we limit each person — how much can a person borrow in total. For example, there’s a cap of 10 months of unsecured credit facilities a person can borrow. A bank can grant up to 10 months or perhaps the bank decides to grant only one month to the person.
"Let’s say, 10 months is the limit. In order to get the customer, they can come up with packages that are so attractive that it makes the customer prepared to take up only credit facilities from them."
MORE SINGAPORE NEWS
Latest Photo Galleries on xinmsn
Ethnic Chinese and local Malays hold a candle-lit vigil for the passengers of Malaysia Airlines flight MH370 that vanished on Saturday. Dura... More Ethnic Chinese and local Malays hold a candle-lit vigil for the passengers of Malaysia Airlines flight MH370 that vanished on Saturday. Duration: 00:43
Date 7 mins ago, Duration 0:43, Views 0