Singapore legislation

Clause 25

Advances, credits and guarantees

(1)

No bank shall —

(a)

grant or permit to be outstanding to any customer any advances, loans or credit facilities or give any financial guarantees or incur any other liabilities on his behalf to an aggregate amount of such advances, loans, facilities, guarantees or liabilities in excess of sixty per centum of the capital funds or, with the approval of the Commissioner, up to but not in excess of one hundred per centum of the capital funds of the bank:Provided that the provisions of this paragraph shall not apply to —

(i)

transactions with the Government;

(ii)

transactions between banks;

(iii)

the purchase of telegraphic transfers or loans or advances made against telegraphic transfers;

(iv)

any facilities granted against letters of credit or bills or guarantees or documents in respect of imports into or exports from Singapore; or

(v)

any other type of transactions which the Commissioner may from time to time approve;

(b)

grant any advance or credit facility against the security of its own shares;

(c)

grant unsecured advances, unsecured loans or unsecured credit facilities which in the aggregate and outstanding at any one time exceed the sum of five thousand Singapore dollars —

(i)

to any of its directors, whether such advances, loans or credit facilities are obtained by its directors jointly or severally;

(ii)

to a firm in which it or any of its directors has an interest as a partner, manager or agent, or to any individual or firm of whom or of which any of its directors is a guarantor; or

(iii)

to any corporation, other than a bank, that is deemed to be related to the bank as described in section 6 of the Companies Act, 1967 (Act 42 of 1967); or

(d)

grant to any of its officers, other than a director, or its employees or other persons, being persons receiving remuneration from such a bank (other than public, registered or licensed accountants, advocates and solicitors, architects, estate agents, doctors and any other persons receiving such remuneration from a bank in respect of their professional services) unsecured advances, unsecured loans or unsecured credit facilities which in the aggregate and outstanding at any one time exceed one year’s emolument of such officer or employee or person.

(2)

In paragraphs (c) and (d) of subsection (1) of this section, the expression “unsecured advances, unsecured loans or unsecured credit facilities” means advances, loans or credit facilities made without security, or in respect of any advance, loan or credit facility made with security, any part thereof which at any time exceeds the market value of the assets constituting that security, or where the Commissioner is satisfied that there is no established market value, on the basis of a valuation approved by him.

(3)

In paragraph (c) of subsection (1) of this section, the expression “director” includes the wife, husband, father, mother, son or daughter of a director.

(4)

All the directors of the bank shall be liable jointly and severally to indemnify the bank against any loss arising from the making of any unsecured advance, unsecured loan or unsecured credit facility under sub-paragraphs (i), (ii) and (iii) of paragraph (c) of subsection (1) of this section.

(5)

Any bank which contravenes any of the provisions of this section shall be guilty of an offence under this Act.

Read in full context — Banking Bill →