Banking (Amendment) Bill

Bill No. 15/1983

Read the first time on 20th December 1983.
An Act to amend the Banking Act (Chapter 182 of the Revised Edition).
Be it enacted by the President with the advice and consent of the Parliament of Singapore, as follows:
Short title and commencement
1.  This Act may be cited as the Banking (Amendment) Act 1983 and shall come into operation on such date as the Minister may, by notification in the Gazette, appoint.
Amendment of section 2
2.  Section 2 of the Banking Act is amended —
(a)by inserting, immediately before the definition of “the Authority”, the following definition:
“ “agreement” means an agreement whether formal or informal and whether express or implied;”;
(b)by inserting, immediately after the definition of “company”, the following definition:
“ “credit facilities” means —
(a)the granting by a bank of advances, loans and other facilities whereby a customer of the bank has access to funds or financial guarantees; or
(b)the incurring by a bank of other liabilities on behalf of a customer;”;
(c)by inserting, immediately after the definition of “licence”, the following definitions:
“ “officer”, in relation to a corporation, includes —
(a)a director, secretary or employee of a corporation;
(b)a receiver or manager of any part of the undertaking of the corporation appointed under a power contained in any instrument; and
(c)the liquidator of a company appointed in a voluntary winding up;
“person” includes a corporation;”;
(d)by deleting the definition of “place of business” and substituting the following definition:
“ “place of business”, in relation to a bank, includes a head or main office, a branch, an agency, a representative office, a mobile branch of the bank, any office established and maintained for a limited period only and any other place used by the bank for the dispensing or acceptance of money on account or for the conduct of other banking business;”; and
(e)by inserting, immediately after the definition of “savings account liabilities”, the following definition:
“ “share”, in relation to a bank, means a share in the share capital of a bank and includes an interest in such a share;”.
Repeal and re-enactment of section 6
3.  Section 6 of the Banking Act is repealed and the following section substituted therefor:
“Examination of persons suspected of transacting banking business and access to premises
6.  Whenever the Authority has reason to believe that a person is transacting banking business without a licence, it —
(a)shall, at all times, have full and free access to the premises at which that person is suspected of transacting banking business without a licence or at which that person may have books, accounts and records; and
(b)shall, at all times, have the power to examine, copy or take possession of the books, accounts and records of that person in order to ascertain whether or not that person has violated, or is violating, any provisions of this Act,
and any refusal to allow full and free access to such premises or to submit such books, accounts and records shall be prima facie evidence of the fact of operation without a licence.”.
Amendment of section 7
4.  Section 7 of the Banking Act is amended by inserting, immediately after subsection (1), the following subsection:
“(1A)  Any person who knowingly or recklessly furnishes any document or information which is false or misleading in a material particular in connection with an application for a licence falling within subsection (1) shall be guilty of an offence and shall be liable on conviction to imprisonment for a term not exceeding 3 years or to a fine not exceeding $50,000 or to both.”.
New sections 14A to 14D
5.  The Banking Act is amended by inserting, immediately after section 14, the following sections:
“Control of take-overs of banks incorporated in Singapore
14A.—(1)  This section and sections 14B and 14C shall apply to and in relation to all natural persons whether resident in Singapore or not and whether citizens of Singapore or not, and to all bodies corporate or unincorporate, whether incorporated or carrying on business in Singapore or not.
(2)  Without prejudice to section 14, no person shall, after the commencement of the Banking (Amendment) Act 1983, enter into an agreement to acquire shares of a bank that is incorporated in Singapore by virtue of which he would, if the agreement is carried out, obtain effective control of that bank without first notifying the Authority of his intention to enter into the agreement and obtaining the approval of the Authority to his entering into the agreement.
(3)  For the purposes of this section —
(a)a person shall be regarded as entering into an agreement by virtue of which he would obtain effective control of a bank if the person alone or acting together with any associate or associates of that person would be in a position to control not less than 20 per cent of the voting power in the bank or would hold interests in not less than 20 per cent of the issued shares of the bank;
(b)a reference to an agreement by which a person would obtain effective control of a bank that is incorporated in Singapore includes a reference to an agreement by which the person would acquire any interest in shares in the bank where, upon the acquisition of those interests and of any other interests in other shares of the bank that he has offered to acquire, he would have effective control of the bank;
(c)a reference to a person offering to acquire interests in shares includes —
(i)a reference to a person making or publishing a statement, however expressed, that expressly or impliedly invites a holder of interests in shares to offer to dispose of interests in shares; and
(ii)a reference to a person taking part in or proposing to take part in negotiations with a view to the acquisition of shares;
(d)a person holds an interest in a share if he has any legal or equitable interest in that share and without limiting the generality of the foregoing an interest in shares shall have the meaning assigned to that expression in section 6A(6) to (10) of the Companies Act (Cap. 185);
(e)a reference to the voting power in a bank is a reference to the total number of votes that might be cast in the general meeting of the bank;
(f)the following persons are associates of a person:
(i)the person’s spouse or a parent or remoter lineal ancestor, son, daughter or remoter issue, brother or sister of the person;
(ii)any partner of the person;
(iii)any corporation of which the person is an officer;
(iv)where the person is a corporation — any officer of the corporation;
(v)any employee or employer of the person;
(vi)any officer of any corporation of which the person is an officer;
(vii)any employee of a natural person of whom the person is an employee;
(viii)any corporation whose directors are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the person or, where the person is a corporation, of the directors of the person;
(ix)any corporation in accordance with the directions, instructions or wishes of which, or of the directors of which, the person is accustomed or under an obligation, whether formal or informal, to act;
(x)any corporation in which the person who is in a position to control not less than 20 per cent of the voting power in the corporation; and
(xi)where the person is a corporation — a person who is in a position to control not less than 20 per cent of the voting power in the corporation.
(4)  Any person who contravenes subsection (2) shall be guilty of an offence and shall be liable on conviction to imprisonment for a term not exceeding 3 years or to a fine not exceeding $50,000 or to both.
Arrangements affecting control of a bank incorporated in Singapore
14B.—(1)  No person shall, after the commencement of the Banking (Amendment) Act 1983, enter into any arrangement in relation to any bank that is incorporated in Singapore by virtue of which he would, if the arrangement is carried out, obtain control of the bank without first notifying the Authority of his intention to enter into the arrangement and obtaining the approval of the Authority to his entering into the arrangement.
(2)  For the purposes of this section —
(a)a person shall be regarded as entering into an arrangement by virtue of which he would obtain control of a bank if he alone or acting together with an associate or associates would be in a position to determine the policy of the bank;
(b)the reference to entering into any arrangement is a reference to any formal or informal scheme, arrangement or understanding, whether expressly or by implication and without limiting the generality of the foregoing includes a reference —
(i)creating a trust whether express or implied; and
(ii)entering into a transaction or agreement,
and references to an arrangement shall be construed accordingly; and
(c)the reference to associates of a person has the same reference as under section 14A.
(3)  Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to imprisonment for a term not exceeding 3 years or to a fine not exceeding $50,000 or to both.
Control of substantial shareholdings in banks incorporated in Singapore
14C.—(1)  No person shall, after the commencement of the Banking (Amendment) Act 1983, enter into any agreement to acquire shares by virtue of which he would, if the agreement is carried out, acquire a substantial shareholding in a bank that is incorporated in Singapore without first notifying the Authority of his intention to enter into the agreement and obtaining the approval of the Authority to his entering into the agreement.
(2)  For the purposes of this section —
(a)a reference to an agreement by which a person would acquire a substantial shareholding in a bank includes a reference to an agreement by virtue of which the person would acquire any interests in shares in the bank where, upon the acquisition by him of those interests or of those interests and of any interests in other shares in the bank, being interests that he has offered to acquire, he would acquire a substantial shareholding in the bank;
(b)a reference to a person offering to acquire interests in shares and to a person having an interest in shares shall be construed in the same way as under section 14A; and
(c)a substantial shareholding has the same meaning as in section 69C of the Companies Act (Cap. 185).
(3)  Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to imprisonment for a term not exceeding one year or to a fine not exceeding $10,000 or to both.
Power of the Authority to require a bank that is incorporated in Singapore to obtain information as to beneficial interests in shares of the bank
14D.—(1)  The Authority may by notice in writing direct a bank that is incorporated in Singapore to obtain from any shareholder of the bank and to transmit to the Authority information —
(a)as to whether that shareholder holds any voting shares in the bank as beneficial owner or as trustee; and
(b)if he holds them as trustee, to indicate as far as it can the person for whom he holds them (either by name or by other particulars sufficient to enable those persons to be identified) and the nature of their interest,
and the bank shall comply with that direction within such time as is specified in the notice.
(2)  For the purposes of this section, “voting shares” has the same meaning as in the Companies Act.”.
Amendment of section 16
6.  Section 16(1)(a) of the Banking Act is amended —
(a)by inserting, immediately after sub-paragraph (i), the following sub-paragraphs:
“(ii)has furnished information or documents to the Authority in connection with its application for a licence which is or are false or misleading in a material particular;
(iii)if it is a foreign bank, has had its licence or authority to operate withdrawn by the regulatory body of the country in which it has its principal place of business;”;
(b)by inserting, immediately after the word “its” in the second line of sub-paragraph (v), the words “directors or”; and
(c)by renumbering sub-paragraphs (ii) to (v) as sub-paragraphs (iv) to (vii), respectively.
Repeal and re-enactment of section 25
7.  Section 25 of the Banking Act is repealed and the following section substituted therefor:
“Credit facilities and limits
25.—(1)  A bank shall not —
(a)grant or permit to be outstanding to any one person, firm, corporation or company or to any group of companies or persons which such person, firm, corporation or company is able to control or influence any credit facilities to an aggregate amount of such credit facilities in excess of 30 per cent of the capital funds or, with the approval of the Authority, up to but not in excess of 100 per cent of the capital funds of the bank;
(b)grant substantial loans which in the aggregate exceeds 50 per cent of its total credit facilities or such other percentage as the Authority may from time to time determine:
Provided that paragraphs (a) and (b) shall not apply to —
(i)transactions with the Government;
(ii)transactions between banks;
(iii)the purchase of telegraphic transfers or loans or advances made against telegraphic transfers;
(iv)any facilities granted against letters of credit or bills or guarantees or documents in respect of imports into or exports from Singapore; or
(v)any other type of transactions which the Authority may from time to time approve;
(c)grant any credit facility against the security of its own shares;
(d)grant, whether directly or indirectly, unsecured credit facilities which in the aggregate and outstanding at any one time exceed the sum of $5,000 —
(i)to any of its directors, whether those credit facilities are obtained by its directors jointly or severally;
(ii)to a firm in which it or any of its directors has an interest as a partner, manager or agent, or to any individual or firm of whom or of which any of its directors is a guarantor; or
(iii)to any corporation, other than a bank, that is deemed to be related to the bank as described in section 6 of the Companies Act (Cap. 185); or
(e)grant to any of its officers other than a director, or its employees or other persons, being persons receiving remuneration from the bank (other than public, registered or licensed accountants, advocates and solicitors, architects, estate agents, doctors and any other persons receiving remuneration from a bank in respect of their professional services) unsecured credit facilities which in the aggregate and outstanding at any one time exceed one year’s emolument of that officer or employee or person.
(2)  In subsection (1)(d) and (e), “unsecured credit facilities” means credit facilities given without security, or in respect of any credit facility given with security, any part thereof which at any time exceeds the market value of the assets constituting that security, or where the Authority is satisfied that there is no established market value, on the basis of a valuation approved by it.
(3)  In subsection (1)(d), “director” includes the wife, husband, father, mother, son or daughter of a director.
(4)  All the directors of the bank shall be liable jointly and severally to indemnify the bank against any loss arising from the making of any unsecured credit facility or any credit facility which becomes unsecured under subsection (1)(d)(i), (ii) and (iii) whether the bank has contravened those provisions or not.
(5)  In this section, “substantial loan” means any credit facility granted by a bank to a single person, firm, corporation or company or to any group of companies or persons which such person, firm, corporation or company is able to control or influence which in the aggregate exceeds 15 per cent of the bank’s capital funds.
(6)  Any bank which contravenes any of the provisions of this section shall be guilty of an offence.”.
New section 27A
8.  The Banking Act is amended by inserting, immediately after section 27, the following section:
“Control over banks in the acquisition of shares in companies
27A.—(1)  No bank shall, after the commencement of the Banking (Amendment) Act 1983, enter into an agreement to acquire the share capital of any company by virtue of which the bank would, if the agreement is carried out, acquire or hold, whether directly or indirectly, an interest exceeding 20 per cent or more of the share capital of that company, without first notifying the Authority of its intention to enter into the agreement and obtaining the approval of the Authority to its entering into the agreement.
(2)  The Authority may approve the entering into the agreement with or without conditions or may disapprove it without giving any reasons.
(3)  Subsection (1) shall not apply to an agreement by virtue of which the bank would acquire an interest exceeding 20 per cent or more of the share capital in a company by way of enforcement of security to satisfy debts due to it by the company, if, upon making the acquisition, the bank obtains the approval of the Authority to retain the shareholdings as an investment. In the event however that the Authority does not grant approval, the bank shall dispose of the shareholdings at the earliest opportunity.
(4)  In this section, “company” means a company whether incorporated in or outside Singapore.
(5)  A bank that contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000.”.
Amendment of section 32
9.  Section 32 of the Banking Act is amended —
(a)by deleting the marginal note and substituting the following marginal note:
“Power of the Authority to secure compliance with sections 10, 19, 25, 27, 28, 29 and 38.”; and
(b)by renumbering the section as subsection (1) of that section, and by inserting immediately thereafter the following subsection:
“(2)  For the purpose of securing compliance with sections 10, 19 and 38 and the sections referred to in subsection (1), the Authority may from time to time by notice in writing require any bank to aggregate its assets, liabilities or profits, as the case may be, with the assets, liabilities or profits of all or any of the bank’s related companies, as described in section 6 of the Companies Act (Cap. 185), and the bank shall comply with that requirement within such time as is specified in the notice.”.
Amendment of section 42
10.  Section 42 of the Banking Act is amended —
(a)by inserting, immediately after “40” in the second line of subsection (2), the words “or to the carrying out of the Authority’s function of supervising the financial condition of any bank”;
(b)by inserting, immediately after the word “their” in subsection (4)(a), the word “written”;
(c)by deleting the words “relating to a banking transaction” in subsection (4)(c)(i) and substituting the words “or his guarantor relating to the customer’s banking transaction”;
(d)by inserting, immediately after subsection (4)(d), the following paragraphs:
“(e)the bank has been served with a garnishee order attaching monies in the account of the customer;
(f)the information relates solely to credit facilities granted by a branch of a bank incorporated outside Singapore and the information is required by its head office;”;
(e)by renumbering the existing paragraph (e) as paragraph (g);
(f)by inserting, immediately after the word “transaction” at the end of paragraph (g), the words “so long as the information required is of a general nature and in no way related to the details of a customer’s account”; and
(g)by inserting, immediately after the definition of “official of any bank” in subsection (8), the following definition:
“ “professional relationship” includes a relationship between a bank and a computer bureau, being a relationship that has been approved by the Authority, and such other relationship with a bank as the Authority may from time to time decide;”.
Amendment of section 53
11.  Section 53 of the Banking Act is amended —
(a)by inserting, immediately after subsection (1), the following subsection:
“(1A)  An auditor shall not be approved by the Authority as an auditor for banks unless he is able to comply with such conditions in relation to the discharge of his duties as may be determined by the Authority.”;
(b)by inserting, immediately after subsection (3), the following subsection:
“(3A)  The Authority may impose all or any of the following duties on an auditor in addition to those provided under subsection (3):
(a)a duty to submit such additional information in relation to his audit as the Authority considers necessary;
(b)a duty to enlarge or extend the scope of his audit of the business and affairs of the bank;
(c)a duty to carry out any other examination or establish any procedure in any particular case; and
(d)a duty to submit a report on any of the matters referred to in paragraphs (b) and (c),
and the bank shall remunerate the auditor in respect of the discharge by him of all or any of these additional duties.”; and
(c)by deleting subsection (4) and substituting the following subsections:
“(4)  The auditor’s report made under subsection (3) shall be attached to the balance-sheet and the profit and loss account and a copy thereof together with any report submitted under subsection (3A) shall be transmitted in writing to the Authority.
(5)  If an auditor, in the course of the performance of his duties as an auditor of a bank, is satisfied that —
(a)there has been a serious breach or non-observance of the provisions of this Act or that otherwise a criminal offence involving fraud or dishonesty has been committed;
(b)losses have been incurred which reduce the capital funds of the bank by 50 per cent;
(c)serious irregularities have occurred, including irregularities that jeopardise the security of the creditors; or
(d)he is unable to confirm that the claims of creditors are still covered by the assets,
he shall immediately report the matter to the Authority.”.
Amendment of section 55
12.  Section 55(2) of the Banking Act is amended by deleting the words “with the public” and substituting the words “without the approval of the Authority”.
Amendment of section 56
13.  Section 56 of the Banking Act is amended by deleting the words “other liabilities of the bank” at the end and substituting the words “unsecured liabilities of the bank other than the preferential debts specified in section 292(1) of the Companies Act (Cap. 185)”.
New sections 56A and 56B
14.  The Banking Act is amended by inserting, immediately after section 56, the following sections:
“Priority of deposit liabilities inter se
56A.—(1)  Notwithstanding the provisions of any written law or rule of law relating to the winding up of companies, in the event of a winding up of a bank the deposit liabilities of the bank shall, amongst themselves, rank in the following order of priority:
(a)firstly, deposit liabilities incurred by the bank with non-bank customers where the deposit liabilities are required by the Authority to be included in the computation of the reserve and liquidity requirements pursuant to sections 34 and 35;
(b)secondly, deposit liabilities incurred by the bank with other banks where the deposit liabilities are required by the Authority to be included in the computation of the reserve and liquidity requirements pursuant to sections 34 and 35;
(c)thirdly, deposit liabilities incurred by the bank with non-bank customers where the deposit liabilities are not required by the Authority to be included in the computation of the reserve and liquidity requirements pursuant to sections 34 and 35.
(2)  The deposit liabilities in each class specified in subsection (1) shall rank in the order specified therein but as between deposit liabilities of the same class shall rank equally between themselves and shall be paid in full unless the assets of the bank are insufficient to meet them in which case they shall abate in equal proportions between themselves.
(3)  For the purposes of section 56 and this section, “deposit liabilities of a bank” means sums of money paid on terms —
(a)under which they will be repaid, with or without interest or at a premium, and either on demand or at a time or in circumstances agreed by or on behalf of the persons making the payments and the bank receiving them; and
(b)which are not referable to the provisions of property or services or to the giving of security.
(4)  For the purposes of subsection (3)(b), money is paid on terms which are referable to the provisions of property or services or to the giving of security if, and only if, —
(a)it is paid by way of advance or part-payment for the sale, hire or other provision of property or services of any kind and is repayable only in the event that the property or services is or are not in fact sold, hired or otherwise provided;
(b)it is paid by way of security for payment for the provision of property or services of any kind provided or to be provided by the bank by whom or on whose behalf the money is accepted; or
(c)it is paid by way of security for the delivery up or return of any property, whether in a particular state of repair or otherwise.
Redemption of securities held by bank under liquidation
56B.—(1)  As soon as practicable after the making of an order for the winding up of a bank, the liquidator of the bank shall publish in the Gazette a notice requiring every debtor of the bank to redeem any property he has deposited with the bank as security for any loan that he has obtained from the bank, and shall also send by registered post such notice to every debtor whose security is held by the bank and whose name is mentioned in the statement of affairs made out under section 234 of the Companies Act (Cap. 185).
(2)  The notice shall specify the latest date up to which any security may be redeemed, which date shall not be less than 3 months from the date of the notice.”.
New section 69A
15.  The Banking Act is amended by inserting, immediately after section 69, the following section:
“Authority to approve operation of an Asian Currency Unit
69A.—(1)  No person shall establish and operate an Asian Currency Unit without first obtaining the approval of the Authority.
(2)  The operation of an Asian Currency Unit shall be subject to such terms and conditions as the Authority may from time to time determine.
(3)  Every person who operates an Asian Currency Unit by virtue of this section shall be subject to the provisions of this Act except those that are specified in subsection (4).
(4)  If the person referred to in subsection (3) is a corporation —
(a)that is incorporated outside Singapore he shall not be subject to the following sections:
(i)section 25(1)(a), (b) and (d)(iii);
(ii)section 27;
(iii)section 28;
(iv)section 34; and
(v)section 35;
(b)that is incorporated in Singapore he shall not be subject to the following sections:
(i)section 34; and
(ii)section 35.
(5)  In this section, “Asian Currency Unit” means an operational unit that has been approved by the Authority to operate in the Asian Dollar Market subject to such conditions as the Authority may determine.”.
Miscellaneous amendments — penalties
16.  The Banking Act is amended —
(a)by deleting the words “five thousand dollars” and “one thousand dollars” in section 4(2) and substituting “$50,000” and “$2,000”, respectively;
(b)by deleting the words “one thousand dollars” and “two hundred and fifty dollars” in section 5(2) and substituting “$5,000” and “$1,000”, respectively;
(c)by deleting the words “five thousand dollars” and “one thousand dollars” in section 7(6) and substituting “$20,000” and “$2,000”, respectively;
(d)by deleting the words “five thousand dollars” and “one thousand dollars” in section 10(2) and substituting “$20,000” and “$2,000”, respectively;
(e)by deleting the words “five hundred dollars” and “one hundred dollars” in section 12(3) and substituting “$5,000” and “$1,000”, respectively;
(f)by deleting the words “five hundred dollars” in section 15(3) and substituting the words “$5,000 and in the case of a continuing offence to a further fine of $1,000 for every day during which the offence continues after conviction”;
(g)by deleting the words “ten thousand dollars” in section 18(3) and substituting the words “$20,000 and in the case of a continuing offence to a further fine of $2,000 for every day during which the offence continues after conviction”;
(h)by deleting the words “five hundred dollars” and “one hundred dollars” in section 21(7) and substituting “$5,000” and “$1,000”, respectively;
(i)by deleting the words “five thousand dollars” and “one thousand dollars” in section 22(7) and substituting “$20,000” and “$2,000”, respectively;
(j)by deleting the words “five thousand dollars” in section 24(7) and substituting “$50,000”;
(k)by deleting the words “interest charge of not more than one-tenth of one per cent of the amount of the deficiency” in section 34(8) and substituting the words “interest charge of $100 per day or such larger amount as the Authority may determine”;
(l)by deleting the words “interest charge of not more than one-tenth of one per cent per day of the amount of the deficiency” in section 35(7) and substituting the words “interest charge of $100 per day or such larger amount as the Authority may determine”;
(m)by deleting section 36(3) and substituting the following subsection:
“(3)  Any bank which fails to comply with any of the requirements of the Authority under subsection (1) shall be liable to pay, on being called upon to do so by the Authority, a penalty interest charge of $100 per day or such larger amount as the Authority may determine for every day during which the deficiency in the minimum assets continues.”;
(n)by deleting the words “five thousand dollars” and “one thousand dollars” in section 41(2) and substituting “$20,000” and “$2,000”, respectively;
(o)by deleting the words “five thousand dollars” and “one thousand dollars” in section 47(2) and substituting “$20,000” and “$2,000”, respectively;
(p)by deleting the words “ten thousand dollars” in section 50(3) and substituting “$50,000”;
(q)by deleting the words “ten thousand dollars” in section 52(4) and substituting “$50,000”;
(r)by deleting the words “two years” and “three thousand dollars” in section 59(1) and substituting the words “3 years” and “$50,000”, respectively; and
(s)by deleting the words “ten thousand dollars” in section 60 and substituting “$50,000”.
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