Monetary Authority of Singapore Introduces Measures in Support of Financial Institutions During COVID-19

financial institution support

Central banks and financial services regulators across the globe are making amendments to their regulatory policies and introduce stimulus packages. These adjustments are created to support financial institutions as they cope up with COVID-19, which impacts their businesses.

In Singapore, the Monetary Authority of Singapore has also announced its adjustment on certain regulatory requirements and supervisory schemes to allow financial institutions in the country to focus on handling problems arising due to the pandemic. Generally, the measures have two goals: ensuring continued lending and liquidity capacity of the banks and to reduce the strains on financial institutions’ resources.

This article guides you through the measures to be issued by MAS in support of financial institutions. Most of these measures, however, are still subject to enforcement via regulatory means.


Capital And Liquidity Requirements Adjustments To Help Sustain Lending Operations

The Monetary Authority of Singapore encourages banks to use their capital buffers as needed to support their lending operations. Banks in the country are capable of doing so as they have created a healthy buffer over the years.

Assisting lending operations should be prioritized over discretionary distributions. Although MAS does not limit dividend policies of banks, capital buffers release should not be utilized to finance share buybacks in this crisis.

MAS will also permit banks to acknowledge more of their regulatory loss allowance reserves as capital. This measure helps improve the banks’ capability to lend. This relief will be applicable until 30th September 2021 and might be extended if needed.

Banks can also use their liquidity buffers as appropriate to fulfill the liquidity demands. In particular, the Monetary Authority of Singapore will adjust the requirement for Net Stable Funding Ratio to lower the stable funding amount which banks need to maintain for loans to businesses and individuals. This measure will be applicable until 30th September 2021, and if necessary, might be extended.


Allowances For Accounting Loan Loss

The organization has engaged with financial institutions and accounting professionals to decide on the proper way to apply accounting standard FRS 109 on loan loss allowances in this challenging period caused by COVID-19. MAS has introduced guidelines to allow financial institutions to consider the extraordinary measures that the government enforced to strengthen the country’s economic resilience when estimating accounting loan loss allowances because of the pandemic’s effect on future economic situations.


Deferring Regulatory Forms Implementation

MAS will postpone various regulatory reforms’ implementation to decrease the strain on banks’ resources. Some of the deferments are as follows:

  • Basel III reforms’ deferment for one year
  • Deferment of revised standards’ enforcement for operational risk, credit risk, leverage ratio, and output floor.
  • Postponement of industry consultations on guidelines for environmental risk management and outsourcing criteria for banks

The enforcement of some new regulatory guidelines and policies are also deferred, including the Individual Accountability and Conduct Guidelines.


Reporting Timelines Extensions

MAS will collaborate with the industry for the assessment of regulatory report’s submission timelines. This measure aims to offer leeway to financial institutions while considering MAS’s requirement for timely particulars to promote supervisory evaluations.


Deferring Industry Projects Implementation

MAS will defer industry projects categorized as non-urgent, which include the release of a new bank’s and insurer’s electronic system to submit applications for key appointment executives’ approval. This new system was scheduled for release in the second quarter of 2020.


Supervisory Visit and On-Site Inspections Suspension

MAS understands that the financial institutions’ measures implementation, including telecommuting and split operations to secure business continuity, have given them an additional operational burden. Hence, MAS will suspend their regular supervisory visits and on-site inspections until further notice.

Instead, it will focus its supervisory assessment on how financial institutions are dealing with the COVID-19 impact on their business and operations. MAS will perform on-site visits to these institutions’ customer-facing locations to confirm and enforce the safe-distancing policy implementation as required by the Ministry of Health.



The COVID-19 outbreak has created disruptions worldwide and produces many legal and commercial problems for businesses. Hence, financial institutions have to focus their efforts and time on handling these challenges and sustain the credit flow to the country’s economy. Fortunately, the Monetary Authority of Singapore’s measures are helpful for the financial services sector.

MAS helps decrease the operational burden of financial institutions, which may otherwise have to grow substantial operational efforts to abide by the upcoming rules, such as the client relationships’ repapering. Entrepreneurs or investors should get advice from professional accounting firms in Singapore to help them devise a financial strategy that helps them manage better cash flow and sustain their business during COVID-19.

Posted in Accounting.