MAS draws clear line to prevent shadow banking

Singapore

EVEN as the Monetary Authority of Singapore (MAS) is welcoming of fintech players, it will draw a clear line to prevent shadow banking from emerging from payment startups.

In an exclusive interview, the managing director of MAS Ravi Menon told The Business Times that under an upcoming piece of payment legislation, larger mobile wallet operators must ringfence e-wallet funds; they will also be barred from using that money to make loans.

Once the Payment Services Bill becomes law, mobile wallet operators with an average daily e-money float of more than S$5 million would have to secure the funds fully under rules set to govern the licence for e-wallet operators.

"The float in the e-wallet has to be secured fully if it is above S$5 million in aggregate - the fintech cannot lend that to somebody else," he said. "Once you take a deposit and lend it out, you become a bank. That's a clear line that a fintech cannot cross, unless it o…