In 2006, the Monetary Authority of Singapore (MAS) and the Ministry of Law launched a joint public consultation on the proposed changes to unsecured credit rules and the proposed application of these rules to moneylenders with appropriate modifications. In 2007, MAS conducted another consultation on the exemption for financial institutions from the maximum credit limit when granting credit to individuals with greater financial means. Pursuant to the feedback received from the public, MAS and the Ministry of Law published the draft legislations for the unsecured credit rules for financial institutions and unsecured lending rules for moneylenders respectively in the Consultation Paper (December 2007) for public comments.
Under the draft rules, financial institutions will be allowed to provide securities financing schemes, such as financing for initial public offerings (IPO), without complying with the unsecured credit rules. Such financing schemes must not exceed 80% of the value of the shares at the time the loan is committed and provided that reasonable steps are taken by the financial institutions to ensure that the aggregate amount of the securities financing obtained by the borrower, inclusive of any other loans, discount, rebate or other benefits offered by the lender and other persons, does not exceed 80% of the value of the shares at the time the loan is committed. Holders of capital markets services licences must also ensure that the total amount of the securities financing for all IPOs does not exceed 20% of their financial resources or average adjusted net capital.
Under the draft rules for moneylenders, they are allowed to provide unsecured loans to borrowers without complying with the unsecured lending rules if borrowers' total income for the period 12 months immediately before the date of application for the loan is at least S$20,000 ($14,515), or their total net personal assets as of that date exceeds S$2 million.