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    Monetary Authority of Singapore  
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    | Banking in Singapore |  
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    | Commercial banks in Singapore 
    are licensed under and governed by the Banking Act. They may undertake 
    universal banking. Besides commercial banking, which includes deposit 
    taking, the provision of cheque services and lending, the banks may also 
    carry on any other business which is regulated or authorised by
    
    MAS, including financial advisory services, insurance broking and 
    capital market services. (Section 30 of the Banking Act defines the 
    permissible activities).  Commercial banks and their 
    representatives do not have to be separately licensed to carry out such 
    activities, but must comply with the business conduct requirements 
    prescribed in the Financial Advisers Act (FAA), Insurance Act (IA) and 
    Securities and Futures Act (SFA) accordingly. In July 2001, the Banking Act 
    was amended to prohibit banks from engaging in non-financial activities. 
    Banks were given three years, until July 2004, to complete divesture of 
    their non-financial businesses. In August 2003, the grace period was 
    extended by two years to July 2006, for banks which have applied to the
    
    MAS for extension. Commercial banks in Singapore 
    operate as full banks, wholesale banks or offshore banks. |  |  |  
    | Full Banks
 
 Full banks may provide the whole range of banking business approved under 
    the Banking Act. There are currently 32 full banks in Singapore. Six of them 
    are locally-incorporated entities under the three local banking groups, and 
    one is a locally incorporated subsidiary of a foreign bank. The remaining 26 
    banks are branches of foreign-incorporated banks.
 
 Eight of the foreign banks operating in Singapore have been awarded 
    Qualifying Full Bank (QFB) privileges. Foreign full banks with QFB 
    privileges may operate a total of 25 locations. They may also
 
 • Share ATMs among themselves, and relocate their sub-branches freely.
 • Negotiate with the local banks on a commercial basis to let their credit 
    card holders obtain cash advances through the local bank's ATM networks.
 • Provide debit services through an EFTPOS network,
 • Offer Supplementary Retirement Scheme and CPF Investment Scheme 
    accounts, and
 • Accept fixed deposits under the CPF Investment Scheme and Minimum Sum 
    Scheme.
 
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    | Wholesale Banks
 
 Wholesale banks may engage in the same range of banking business as full 
    banks, except that they do not carry out Singapore Dollar retail banking 
    activities. They operate within the Guidelines for Operations of Wholesale 
    Banks issued by
    
    MAS.
 
 Offshore Banks
 
 Offshore banks can engage in the same activities as full and wholesale banks 
    for businesses transacted through their Asian Currency Units (ACUs). The ACU 
    is an accounting unit, which the banks use to book all their foreign 
    currency transactions conducted in the Asian Dollar Market (ADM). The banks' 
    Singapore dollar transactions are separately booked in the Domestic Banking 
    Unit (DBU). For further information on these two accounting units of banks 
    in Singapore, please refer to Asian Currency and Domestic Banking Units.
 
 The scope of business transacted in offshore banks' DBU has slightly more 
    restrictions on dealings with residents as compared with wholesale banks. 
    Offshore banks operate within the Guidelines for Offshore Banks issued by
    
    MAS.
 
 Under the banking liberalisation programme, offshore banks were given 
    greater flexibility in Singapore dollar wholesale business. Offshore banks 
    had their Singapore dollar lending limit raised to S$500 million. They are 
    now allowed to engage in Singapore dollar swaps in respect of proceeds 
    arising from the issue of Singapore dollar bonds managed or arranged by 
    them.
 
 Merchant Banks
 
 Besides the three categories of commercial banks, financial institutions may 
    also operate as merchant banks. Merchant banks are approved under the 
    Monetary Authority of Singapore Act and their operations are governed by the 
    Merchant Bank Directives. Their ACU operations are also subject to the 
    Banking Act.
 
 The typical activities of merchant banks include corporate finance, 
    underwriting of share and bond issues, mergers and acquisitions, portfolio 
    investment management, management consultancy and other fee-based 
    activities. Most merchant banks have, with
    
    MAS' approval, established ACUs, through which they compete with 
    commercial banks in the Asian Dollar Market. In their DBU, merchant banks 
    may not accept deposits or borrow from the public. However they may accept 
    deposits or borrow from banks, finance companies, shareholders and companies 
    controlled by their shareholders.
 
 Finance Companies
 
 Finance companies focus on providing small-scale financing, including 
    instalment credit for motor vehicles and consumer durables, and mortgage 
    loans for housing. Finance companies may not offer deposit accounts which is 
    repayable on demand by cheque, draft or order. They are licensed under and 
    governed by the Finance Companies Act.
 
 Generally, finance companies are not allowed to grant unsecured credit 
    facilities exceeding S$5,000 to any person or deal in any foreign currency, 
    gold or other precious metals or acquire foreign currency denominated 
    stocks, shares or debt securities. They may however apply to
    
    MAS for exemption to expand their scope of activities if they have the 
    risk management capability. Finance companies with capital funds of more 
    than S$100 million may apply for exemption to deal in foreign currencies or 
    precious metals and foreign currency -denominated stocks, shares or debt 
    securities. The exemption is conditional on the aggregate amount of foreign 
    currency exposure not exceeding 10 per cent of the finance company's capital 
    funds at any time.
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