Liquid assets requirement
Open ↗38.—(1) The Authority may, from time to time, by written notice to any bank in Singapore or class of banks in Singapore, impose requirements in relation to the minimum amount or amounts of liquid assets to be held by the bank or class of banks, having regard to the risks arising from the activities of the bank or class of banks (as the case may be) and such other factors as the Authority considers relevant.[5/2016]
(1A) For the purposes of subsection (1), the Authority may impose different requirements for different types of liquid assets.[5/2016]
(2) Without limiting subsection (1), the Authority may, in a notice issued under that subsection, impose limits on each liquid asset or class of liquid assets to be held by a bank or class of banks.
(2A) 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 hold different amount or amounts of liquid assets, having regard to the risks arising from the activities of each bank, the systemic impact of each bank on the financial sector and such other factors as the Authority may consider relevant.
(3) Whenever the Authority issues a notice under subsection (1), each bank must be allowed such period of grace, being at least 3 business days, as may be specified in the notice, in which to comply with its provisions.
(4) A bank must not, during any period in which it has failed to comply with any requirement imposed under subsection (1), without the approval of the Authority, grant further advances to any person.
(5) [Deleted by Act 5 of 2016]
(6) The Authority may by written notice require each bank in Singapore to render such returns as the Authority considers necessary for the implementation of this section.
(6A) The Authority may, at any time, utilise the liquid assets of a bank held for the purposes of subsection (1) for the settlement of the bank’s payment obligations, book‑entry securities and instruments under any real‑time gross settlement system established and operated under section 29A of the Monetary Authority of Singapore Act 1970, even if this may result in the bank failing to comply with any requirement imposed under subsection (1).
(6B) Despite subsection (1) and subject to subsection (6E), a bank may, in accordance with the requirements imposed under subsection (6C), utilise its liquid assets held for the purposes of subsection (1) if the bank —(a)
is in a liquidity stress situation; and
(b)
is solvent immediately before, and will remain solvent after, the utilisation of its liquid assets.
(6C) For the purposes of subsection (6B), the Authority may, from time to time, by written notice to a bank impose requirements in relation to the utilisation by the bank of its liquid assets held for the purposes of subsection (1), including —(a)
the procedures which the bank must comply with before or after utilising, or during the utilisation of, its liquid assets; and
(b)
the manner in which the bank may utilise its liquid assets.
(6D) A bank must, within such time as may be specified by the Authority, provide any information required by the Authority in relation to its liquidity stress situation and the utilisation of its liquid assets held for the purposes of subsection (1).
(6E) Where the Authority is of the opinion that —(a)
a bank is not in a liquidity stress situation;
(b)
a bank has failed to comply with any requirement imposed under subsection (6C);
(c)
a bank is or is likely to become insolvent, or that it is or is likely to become unable to meet its obligations, or that it is about to suspend payments; or
(d)
it is in the public interest to do so,
the Authority may by written notice to the bank —
(e)
where the bank has already utilised its liquid assets held for the purposes of subsection (1), direct the bank to comply with any requirement imposed under subsection (1) within such time as may be specified by the Authority in the notice; or
(f)
where the bank has not, or has not fully, utilised its liquid assets held for the purposes of subsection (1), do one or more of the following:(i)
refuse to allow the bank to utilise its liquid assets held for the purposes of subsection (1) which are within the control of the Authority;
(ii)
direct the bank to cease utilising its liquid assets held for the purposes of subsection (1);
(iii)
direct the bank to comply with any requirement imposed under subsection (1) within such time as may be specified by the Authority in the notice.
(7) Any bank which fails to comply with any requirement imposed 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.
(7A) A financial penalty collected by the Authority under subsection (7) must be paid into the Consolidated Fund.[10/2013]
(8) To avoid doubt, for the purposes of subsections (4) and (7), a bank is to be treated as having failed to comply with a requirement imposed under subsection (1) even if such failure is the result of an action of the Authority under subsection (6A).
(8A) Any bank which fails to comply with —(a)
subsection (4) or (6D);
(b)
any requirement of the Authority under subsection (6) or (6C); or
(c)
any direction of the Authority under subsection (6E),
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 of $25,000 for every day or part of a day during which the offence continues after conviction.
(9) In this section —“liquid assets” means any asset that can be easily sold or converted into cash at little or no loss in value, as specified in the notice mentioned in subsection (1);
“liquidity stress situation” has the meaning given in the Fifth Schedule.[5/2016]
Minimum cash balances
Open ↗39.—(1) 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.
(2) Subject to the limit specified in subsection (1), the Authority may —(a)
prescribe different ratios for different types of liabilities; and
(b)
further prescribe the method of computing the amount of the required reserves.
(2A) 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.
(3) 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.
(4) 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.
(5) 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.
(6) 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.
(7) 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.
(7A) A financial penalty collected by the Authority under subsection (7) must be paid into the Consolidated Fund.[10/2013]
(8) 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).
(9) 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.[5/2016]
Use of minimum cash balances in liquidity stress situation
Open ↗39A.—(1) Despite section 39 but subject to subsection (6), a bank may utilise its minimum cash balances, if the bank —(a)
is in a liquidity stress situation;
(b)
is solvent immediately before, and will remain solvent after, the utilisation of its minimum cash balances; and
(c)
is permitted by a notice under subsection (2) to utilise its minimum cash balances.[5/2016]
(2) The Authority may, by written notice to any bank in Singapore or class of banks in Singapore, permit the bank or a bank within the class to use its minimum cash balances in the event that it is in a liquidity stress situation.[5/2016]
(3) When deciding whether to issue a notice under subsection (2) to a bank or class of banks, the Authority may have regard to —(a)
the risks arising from the activities of the bank or class of banks; and
(b)
such other factors as the Authority considers relevant.[5/2016]
(4) The Authority may in a notice under subsection (2) impose on the bank or a bank within the class requirements in relation to the utilisation by the bank of its minimum cash balances, including —(a)
the procedures which the bank must comply with before or after utilising, or during the utilisation of, its minimum cash balances; and
(b)
the manner in which the bank may utilise its minimum cash balances.[5/2016]
(5) A bank that has purportedly used its minimum cash balances in a liquidity stress situation must, within such time as may be specified by the Authority, provide such information as the Authority may require concerning —(a)
the liquidity stress situation and the utilisation of its minimum cash balances; or
(b)
the bank’s compliance with any requirement imposed under subsection (4).[5/2016]
(6) Where the Authority is of the opinion that —(a)
a bank that has used or is about to use its minimum cash balance —(i)
is not in a liquidity stress situation;
(ii)
has failed to comply with any requirement imposed under subsection (4); or
(iii)
is or is likely to become insolvent or unable to meet its obligations, or is about to suspend payments; or
(b)
it is otherwise in the public interest to do so,
the Authority may by written notice to the bank direct the bank to do the applicable act or acts mentioned in subsection (7).
[5/2016]
(7) For the purposes of subsection (6), the acts are —(a)
if the bank has already utilised its minimum cash balances, to comply with any requirement imposed under section 39(1) within such time as may be specified by the Authority in the notice; or
(b)
if the bank has not utilised or has not fully utilised its minimum cash balances, one or more of the following:(i)
not to use the bank’s minimum cash balances;
(ii)
to stop utilising the bank’s minimum cash balances;
(iii)
to comply with any requirement imposed under section 39(1) within such time as may be specified by the Authority in the notice under subsection (6).[5/2016]
(8) A bank which fails to comply with any direction or requirement of the Authority under subsection (4), (5) or (6) 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.[5/2016]
(9) In this section —“liquidity stress situation” has the meaning given to it in the Fifth Schedule;
“minimum cash balances”, in relation to a bank, means its minimum cash balances maintained on deposit with the Authority under section 39.[5/2016]
Asset maintenance requirement
Open ↗40.—(1) The Authority may, from time to time, by written notice to any bank in Singapore or any class of banks in Singapore, impose requirements in relation to the minimum amount or amounts of assets in Singapore that the bank or each bank in the class is to hold, for the purpose of meeting its liabilities.[5/2016]
(2) Without limiting subsection (1), the Authority may, in a notice issued under that subsection, specify —(a)
the types of liabilities in respect of which assets are to be maintained and held in Singapore;
(b)
the types of assets that are to be treated as assets maintained and held in Singapore and the minimum amount or amounts in respect of each asset for the purpose of any requirement of the Authority under that subsection; and
(c)
the method for the valuation of assets maintained and held in Singapore, including any deductions to be made in respect of the assets.
(3) Where the Authority issues a notice under subsection (1) to a class of banks, the Authority may impose different requirements on different banks, having regard to the financial soundness of each bank, the risk profile of each bank, and such other factors as the Authority may consider relevant.[5/2016]
(4) Any bank which fails to comply with any requirement of the Authority under subsection (1) 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.
Source: Singapore Statutes Online (Attorney-General's Chambers), © Government of Singapore.
