'Debt holiday' loans a fifth of total approved under programme: MAS

SINGAPORE – Loans on “debt holiday” made up about a fifth of those approved under an industrywide relief programme as at the end of February.

The loans amounted to more than $3.8 billion in loan principal, said the Monetary Authority of Singapore (MAS).

Small and medium-sized enterprises (SMEs) still deferring loan repayments were mostly from the real estate, services and construction sectors. “The higher take-up in these sectors could be attributed to more severe cash-flow strains as a result of revenue disruptions in 2020,” said an MAS spokesman.

The Extended Support Scheme – Standardised (ESS-S) allows businesses in sectors hit hardest by the pandemic to defer 80 per cent of principal payments on their secured loans granted by banks or finance companies, as well as loans granted under Enterprise Singapore’s Enhanced Working Capital Loan Scheme and Temporary Bridging Loan Programme, until June 30.

The extended support measures expire later for individuals (see table).

“For SMEs, the lower take-up rate under the ESS-S, in comparison with the SFRP (Special Financial Relief Programme), suggested that most SMEs have been able to resume loan repayments and are recovering alongside the improvement in economic activity,” said the MAS spokesman. SFRP measures ended on Dec 31 last year.

“Nonetheless, the outlook remains uncertain, and we continue to monitor their repayment ability closely,” he added.

About 1.5 per cent of property loans for individuals were under extended relief measures as at the end of February, amounting to more than $3.1 billion.

MAS said both businesses and individuals can apply for specific assistance from their lenders even after the industrywide relief schemes end.

Meanwhile, individuals who are deferring premium payments will have to foot the bill again. Applications closed last Wednesday under an industrywide scheme aimed at offering relief amid the pandemic.

However, some insurers will allow cash-strapped customers to apply to continue deferring premium payments on a case-by-case basis.

NTUC Income will be extending the application period for its income support schemes, while Great Eastern (GE) is doing the same for its Deferment of Premium Payment (DPP) programme, until Dec 31.

Policyholders can also opt for other measures to manage payments. For example, eligible AIA customers who are unable to repay deferred premiums in a lump sum after a year of deferment can apply for 12-month instalment payments.

Aviva policyholders can change their payment frequencies, apply for a policy loan or activate an automatic premium loan to finance instalment plans. Other measures include reducing the sums assured of their basic plans and supplementary benefits, which in turn reduces premiums, or switching to lower coverage for hospitalisation plans.

Ms Lee Tsui Lin, head of operations at Prudential Singapore, said customers who continue to face difficulty paying their deferred premiums can consider the insurer’s premium instalment plan and cover assured scheme. It allows customers whose policies have lapsed due to non-payment of premiums to have the same level of coverage, subject to a maximum sum assured, by paying a reduced one-time annual premium amount. Policyholders can revive their original policies once their financial situation improves.

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Insurers said they are now seeing fewer requests for premium deferments. There are now about 400 policyholders in Aviva’s premium deferment programme. GE has around 1,300, which it said is “a very small percentage compared with our total customer base”.

About 4,500 customers were on AIA’s premium deferment scheme as at Dec 28 last year. AXA said less than 1 per cent of its customers have applied to have their premium payments deferred, and it has seen a decline in applications.

Meanwhile, the average number of monthly applications received by Income dropped from a high of 1,500 at the launch of the income support scheme last April to fewer than 100 in February, said Mr Fabian Ng, its general manager for consumer business.

Mr Colin Chan, GE’s managing director of group marketing, said most of the 2,600 policyholders in the insurer’s DPP programme were able to make repayments to renew their policies upon the completion of their six-month deferment.

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