Starting next month, individuals will be given a more fluid access to unsecured credit under the Monetary Authority of Singapore's revised rules.

Under the new rules, which emerged from extensive consultation between MAS and the Ministry of Law and public feedback, the minimum annual income requirement for unsecured credit facilities will be lowered from $30,000 to $20,000.

However, the minimum annual income for credit cards remains unchanged at $30,000 for individuals at or below 55 years of age and $15,000 for individuals above 55 years of age.

An aggregate maximum credit limit for all unsecured credit and credit cards across all affiliated entities will be set at four times the borrower’s monthly income for individuals earning at least $30,000.

For individuals with an annual income below $30,000, who are therefore not eligible for credit cards, a maximum credit limit of two times the borrower's monthly income will apply.

The changes attempt to maintain a balance between allowing responsible borrowing and the Government's social policy of discouraging individuals from spending beyond their means.

Lenders and borrowers both have a role to play in ensuring that use of unsecured credit and credit cards is responsible, sustainable and within the means of the borrower, said MAS in a media statement.

MAS will also introduce the following measures on financial institutions (FI) to further mitigate the risks of over-borrowing by individuals from all income groups:

a) FIs will be required to conduct comprehensive checks with the credit bureau before granting each new credit card, charge card or unsecured credit facility, as part of their rigorous credit risk assessment processes.

b) FIs will be restricted from unsolicited offers of unsecured credit facilities to customers, unless a written request is provided by the customers.

c) More explicit requirements on disclosure for credit cards and unsecured credit will be set. Disclosure of charges, rates of computation, consequences of late payment and notice to encourage prompt settlement is required for both issuers of credit cards and lenders of unsecured credit facilities.