(Singapore, 2 April, 2020) Singapore’s proposed COVID-19 Bill will provide needed temporary protection for SMEs while being carefully scoped to avoid impairing the interests of banks and Singapore’s role in international financial transactions, the Monetary Authority of Singapore (MAS) has said.
MAS made such comments in response to media queries about the implications of the COVID-19 (Temporary Measures) Bill on the financial sector.
The proposed Bill covers only SME loans with specific security located in Singapore mostly including Singapore-based commercial or industrial property, plants, machinery or fixed assets used for business purposes.
“The proposed Bill provides legal protection for the specific security and hence complements banks’ relief measures for SMEs,” MAS says.
MAS says that the contractual rights of banks are not affected, other than the right to commence legal action for a default on a loan covered under the proposed Bill, which is put on hold during the prescribed six-month period.
“Banks’ contractual right to charge fees and interest for non-payment or late payment of loan obligations due is unaffected.”
SMEs seeking the protection of the proposed Bill for their security should therefore bear in mind that they may incur late charges and higher interest, and end up paying more in the future, MAS says.
“SMEs who face cash flow difficulties should actively engage their banks to explore the options available under the package of relief measures announced by MAS, which include the deferment of principal repayment, with a corresponding waiver of late charges.”
Apart from the secured SME loans specified above, the proposed Bill has no implications for banks on any of their other facilities, transactions, or contracts, or for Singapore’s role as an international financial center.