Notice on Lending of Singapore Dollar to Non-Resident Financial Institutions

Monetary Authority of Singapore
FINANCE COMPANIES ACT
(CAP. 108)
NOTICE ON LENDING OF SINGAPORE DOLLAR TO NON-RESIDENT FINANCIAL INSTITUTIONS

Notice No : MAS 816
Issue Date : 28 May 2004 (last revised on 28 June 2021) NOTICE ON LENDING OF SINGAPORE DOLLAR TO NON￾RESIDENT FINANCIAL INSTITUTIONS MAS Notice 816 dated 20 March 2002 is cancelled. 1 Scope
1.1 This Notice issued pursuant to section 30 of the Finance Companies
Act (Cap 108) (the “Act”) governs the lending of S$ by finance companies to non-resident financial institutions. [MAS Notice 816 (Amendment) 2021]
1.2 This Notice does not apply to the lending of S$ to individuals and non￾financial institutions (including corporate treasury centres).
1.3 This Notice does not permit finance companies to engage in financial
activities beyond the scope of their licences or in contravention of the Act or other MAS Notices, Directions or Guidelines. [MAS Notice 816 (Amendment) 2021] 2 Definition
2.1 In this Notice:
“Entities” include legal entities, partnerships/firms and other forms of business vehicles; [MAS Notice 816 (Amendment) 2021] “Financial institutions” means entities whose main business is in financial services, including one or more of the following:
(a) banking;
(b) merchant banking;
(c) investment banking;
(d) financing;

Notice on Lending of Singapore Dollar to Non-Resident Financial Institutions 2 (e) insurance; (f) dealing in capital market products; (g) asset / fund management (including hedge funds); (h) money, futures, and prime brokering; (i) other types of financial activity that MAS may designate in writing; [MAS Notice 816 (Amendment) 2021] “Non-residents” means entities which do not fall within the definition of a resident; [MAS Notice 816 (Amendment) 2021] “Residents” means:
(a) companies which are at least 50% owned by Singapore citizens; or (b) the following financial institutions in Singapore which are subject to this notice, or MAS Notices 109, 757, 1105 or SFA 04-N04:
(i) a bank licensed under the Banking Act (Cap 19); (ii) a merchant bank licensed under the Banking Act; (iii) a finance company licensed under the Act; (iv) a licensed insurer (other than a captive insurer) under the Insurance Act (Cap 142); and (v) a person holding a capital markets services licence to carry on a business of dealing in capital market products that are securities, units in a collective investment scheme or securities-based derivatives contracts under the Securities and Futures Act (Cap 289); and [MAS Notice 816 (Amendment) 2021]

Notice on Lending of Singapore Dollar to Non-Resident Financial Institutions 3 “S$ credit facilities” include loans, contingent credit lines and foreign exchange swaps involving a sale of S$ to a non-resident financial institution in the first leg of the transaction.
2.2 The expressions used in this Notice, except where expressly defined in
this Notice or where the context otherwise requires, have the same meanings as in the Act. [MAS Notice 816 (Amendment) 2021] 3 S$ Credit Facilities
3.1 A finance company may lend S$ to non-resident financial institutions
for any purpose whether in Singapore or elsewhere as long as the aggregate S$ credit facilities do not exceed S$5 million per entity1 . [MAS Notice 816 (Amendment) 2021]
3.2 Where a finance company lends S$ to a non-resident financial
institution for any purpose whether in Singapore or elsewhere and the aggregate S$ credit facilities exceed S$5 million for that non-resident financial institution, a finance company must comply with all of the following conditions:
[MAS Notice 816 (Amendment) 2021]
(a) Where the S$ proceeds are to be used outside Singapore, the finance company must ensure that the S$ proceeds are swapped or converted into foreign currency upon draw-down; [MAS Notice 816 (Amendment) 2021] (b) Notwithstanding paragraph 3.2(a), the finance company must not extend S$ credit facilities to non-resident financial institutions if there is reason to believe that the S$ proceeds may be used for S$ currency speculation. [MAS Notice 816 (Amendment) 2021] 1 For financial institutions seeking to obtain S$ credit facilities, each subsidiary is considered a separate entity while the head office and all overseas branches are collectively regarded as one entity. [MAS Notice 816 (Amendment) 2021]

Notice on Lending of Singapore Dollar to Non-Resident Financial Institutions 4
3.3 A finance company must report to MAS, monthly, its aggregate
outstanding S$ lending to non-resident financial institutions in the format in
Appendix 1. Where a finance company does not have any aggregate
outstanding S$ lending to non-resident financial institutions for a particular month, the finance company must submit a nil return for that month. A finance company must submit all of the information required in Appendix 1 to the Monetary Management Division of MAS no later than 10 working days after the reporting month. A finance company must keep documentary evidence supporting these S$ credit facilities for audit and inspection purposes. [MAS Notice 816 (Amendment) 2021] 4 S$ Equity and Bond Issuance
4.1 A finance company may arrange S$ equity or bond issues for non￾resident financial institutions. If the S$ proceeds are to be used outside
Singapore, they must be swapped or converted into foreign currency before remitting abroad. [MAS Notice 816 (Amendment) 2021] 5 Consultation Procedure
5.1 Should a finance company need to consult MAS, it may write to:
[MAS Notice 816 (Amendment) 2021]
Monetary Management Division, MAS
10 Shenton Way, MAS Building
26th Floor
Singapore 079117
Fax: 62299491
Email: sgddiv@mas.gov.sg

• Endnotes on History of Amendments

1. MAS Notice 816 (Amendment) 2018 with effect from 8 October 2018.

Notice on Lending of Singapore Dollar to Non-Resident Financial Institutions 5
2. MAS Notice 816 (Amendment) 2021 dated 28 June 2021 with effect
from 1 July 2021.

Notice on Lending of Singapore Dollar to Non-Resident Financial Institutions 6
APPENDIX 1
OUTSTANDING S$ CREDIT FACILITY (To be submitted online) AS AT END OF (month) Name of Finance Company _____________ Finance Company Code _____ Officer-in-charge ____________________ (Tel) ____________________ S$ CREDIT FACILITIES Non-Resident Financial Institution Outstanding Amount (S$’m) In Singapore Outside Singapore Total