Monday, 2 Oct 2023

Coronavirus: Individuals can apply to defer property loan, insurance premium payments; Singapore SMEs to get cash flow support

SINGAPORE – Individuals can apply to their banks and insurers to defer repayment of property loans, as well as premium payments for life and health insurance plans, as part of a package of measures to ease their financial strain arising from the Covid-19 outbreak.

The package, rolled out by the Monetary Authority of Singapore (MAS) and the financial sector on Tuesday (March 31), also offers cash flow support to small and medium-sized enterprises, such as by ensuring continued access to bank credit and insurance cover.

It will also help to ensure that interbank funding markets remain liquid and well-functioning, the MAS added.

“In the months ahead, many individuals and SMEs in Singapore will continue to face challenges in managing their cash flows and meeting their financial obligations, such as loan repayments and insurance premiums,” said the MAS.

The regulator worked with the Association of Banks in Singapore, the Life Insurance Association, the General Insurance Association and the Finance Houses of Association of Singapore for the slew of measures.

Measures to help individuals include allowing them to defer either principal payment or both principal and interest payments on their residential property loans until Dec 31.

Interest will accrue only on the deferred principal amount, and no interest will be charged on the deferred interest payments, the MAS said.

Lenders will approve the request for deferment if the applicant is not in arrears for more than 90 days as at April 6, 2020.

Applicants also do not need to show that they had been hit by the Covid-19 fallout to obtain approval.

Those with unsecured loans can also apply to their lenders to convert their outstanding balances into term loans at a reduced rate of interest, capped at 8 per cent.

This is lower than the 26 per cent typically charged on credit cards, MAS noted.

Customers of life and health insurance policies can apply to their insurer to defer premium payments for up to six months while maintaining insurance coverage.

Premium deferment is available for all individual life and health insurance policies with a policy renewal or premium due date between April 1 and Sept 30.

General insurance policyholders for property and vehicles may apply to their insurers for instalment payment plans while maintaining protection.

For SMEs, they can choose to defer principal payments on their secured term loans up to Dec 31, subject to banks’ and finance companies’ assessment.

They will also be able to extend the tenure of their loans by up to the corresponding period of principal deferment.

This relief will be available to SMEs that continue to pay interest and are in good standing with their banks and finance companies.

Banks and finance companies can also apply for low-cost funding through a new MAS-Singdollar facility for loans granted under Enterprise Singapore’s SME Working Capital Loan scheme and Temporary Bridging Loan Programme.

Banks and finance companies can apply for these funds until end-December, provided they commit to pass on the savings in funding cost to their SME borrowers.

The initiative aims to lower the interest rates charged to eligible SME borrowers, and details will be provided at a later date, the MAS said.

“Deferring payments increases future obligations and hence borrowers and policyholders should weigh their options carefully,” said the MAS.

Applications open on April 1 for insurers, and April 6 for banks.

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