The Monetary Authority of Singapore announced a new measure to help borrowers avoid accumulating excessive unsecured debts.
The MAS said Dec. 15 that its credit limit management measure will cap the additional unsecured credit that a financial institution may extend to a borrower whose outstanding unsecured debts exceeds 6x his monthly income.
A financial institution will not be allowed to grant any increase in credit limit or any new unsecured credit facilities if doing so will increase the borrower's outstanding unsecured debts to 12x their monthly income.
The measures aim to pre-emptively cap a borrower's total credit limit before they are affected by the industrywide borrowing limit. Borrowers may still draw on their existing unutilized unsecured credit facilities.
The new measure will take effect Jan. 1, 2018.