The regulator has announced measures that will help financial institutions maintain key financial services to customers and sustain the flow of credit to the economy.
The Monetary Authority of Singapore (MAS) has announced that it will allow full recognition of regulatory loss allowance reserves (RLAR) as Tier 2 Capital, and will halve the Net Stable Funding Ratio requirement that banks must maintain for loans to individuals and businesses that are maturing in less than six months, from 50 percent to 25 percent.
These measures will help to enhance banks’ capacity to lend, and will apply until 30 September 2021, though this can be extended if necessary, the regulator said in a statement.
At the same time, financial institutions will be allowed to take into account the government’s fiscal assistance and banks’ relief measures in setting more realistic accounting loan loss allowances, and they will have more latitude on submission timelines for regulatory reports.
Basel III Delayed
MAS said it would defer the implementation of the final set of Basel III reforms for Singapore banks by one year, in line with the decision by the Basel Committee on Banking Supervision (BCBS) to delay the internationally agreed start date for the revised standards.
«While the reforms are necessary to strengthen the banking system over the long term, they will require banks to make considerable operational adjustments which they would be hard-pressed to make under the current challenging conditions.,» the regulator said.
Focus on Handling Covid-19
Non-urgent industry projects will take a backseat during this period, and MAS will suspend all regular on-site inspections and supervisory visits to FIs until further notice.
Instead, the regulator said it would focus its supervisory reviews on how financial institutions are managing the impact of Covid-19 on their business and operations.
