Section 39

The Authority may, from time to time, by written notice to any bank in Singapore, or any class of banks in Singapore, require the bank or banks to maintain minimum cash balances, not exceeding 30% of its or their deposits and other liabilities, on deposit with the Authority as reserves against its or their deposits and other liabilities.

Subject to the limit specified in subsection (1), the Authority may —

Where the Authority issues a notice under subsection (1) to a class of banks, the Authority may require different banks within the class of banks to maintain different minimum cash balances, having regard to the risks arising from the activities of each bank, the financial soundness of each bank and such other factors as the Authority may consider relevant.

Any prescription of, or change in, the minimum reserve requirements under subsection (1) or (2) takes effect only after the end of 30 days’ notice to the banks of the Authority’s intention to take such action.

Where a bank (called in this section the defaulting bank) has failed to maintain sufficient minimum cash balances required under subsection (1), the Authority may by order in writing direct the defaulting bank to make good the deficiency within the period specified in the order and the defaulting bank must comply with the requirements of the order.

If the defaulting bank fails to make good the deficiency within the period specified in the order mentioned in subsection (4), it is lawful, despite the provisions of any other written law, for the Authority to serve a written notice upon any other bank in Singapore with which the defaulting bank has a credit balance, whether in current or deposit account, directing that bank to transfer to the Authority such amount as is specified in the notice as being equivalent to the amount of the deficiency in the minimum cash balances of the defaulting bank required under subsection (1) and the other bank must immediately comply with the requirements of that notice.

No action shall lie against, and no liability shall attach to, any bank in Singapore that complies with the requirements of a notice mentioned in subsection (5) for any loss or damage suffered by the defaulting bank as a result of the other bank taking action in compliance with the requirements of that notice.

Any bank which fails to comply with any requirement of the Authority under subsection (1) shall be liable to pay, on being called upon to do so by the Authority, for every day or part of a day of such failure, a financial penalty in accordance with such formula as the Minister may, by order in the Gazette, prescribe.

A financial penalty collected by the Authority under subsection (7) must be paid into the Consolidated Fund.

The Authority may call upon a bank to pay a financial penalty under subsection (7) in addition to any action taken in relation to the bank under subsection (4) or (5).

Any bank which fails to comply with any direction of the Authority under subsection (4) or (5) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $250,000 and, in the case of a continuing offence, to a further fine not exceeding $25,000 for every day or part of a day during which the offence continues after conviction.