A new repayment scheme that aims to help over-indebted customers repay unsecured loans from facilities like credit cards, personal loans and overdrafts will be launched next Monday (Jan 23).
Under the new scheme, a customer can consolidate all his/her unsecured credit balances across the 14 banks with just one institution.
This means that the bank that administers the DCP will “buy over” the customer’s outstanding balances, fees and interest charges from his existing accounts with other banks. Those accounts will then be suspended or closed.
The scheme will offer borrowers a convenient mode of payment for daily financial needs and includes an unsecured credit of one month’s income.
This new repayment scheme follows the Repayment Assistance Scheme (RAS) which expired in December 2015. The RAS only offered lower interest rates and an eight-year repayment period for amounts in excess of 12 times a borrower’s income, whereas the DCP will cover all of a borrower’s unsecured credit balances.
About 11,000 applications for the RAS were received, with 6,000 of them approved by the time the scheme closed.