The Banking (Amendment) Bill was introduced in parliament on November 8 2006, following earlier public consultation by the Monetary Authority of Singapore (MAS).
The Bill gives effect to several new policies and measures of the MAS to strengthen prudential safeguards, facilitate risk-based supervision, provide banks with greater operational flexibility and update regulations.
Changes in the Bill include a revision of the methodologies for limiting large and related party exposures, for relevancy and consistency with international best practice. The Bill requires foreign full and wholesale bank branches to maintain a minimum level of assets in Singapore, proportionate to their liabilities. It ranks all of a bank's non-bank deposit liabilities ahead of interbank liabilities, with interbank liabilities ranking pari passu with other unsecured creditors.
The MAS would be granted a wider role, and a broader range of options, in the bank resolution process. The Bill aims to facilitate risk-based supervision and allow operational flexibility of banks with reference to an individual bank's financial strength, risk profile and risk management capabilities, and to enhance the liquidity risk supervision framework by permitting the drawing down of liquidity reserves to deal with liquidity stress situations.
The Bill suggests that the regulatory scope for credit card issuance be expanded to all issuers targeting the Singapore market.
Lastly, the Bill repeals the statutory reserve fund requirement for banks in Singapore, qualifying the restriction on the use of the word bank, empowering the MAS to prescribe what constitutes a deposit, and revising the rules on the disclosure of information by the MAS.
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