2. The Banking Regulations (Rg 5) are amended by inserting, immediately after regulation 23B, the following regulations:| “Prescribed joint purchase and periodic sale business |
23C.—(1) For the purposes of section 30(1)(d) of the Act, and subject to paragraph (2), the business of jointly purchasing and selling (on a periodic basis) assets (whether in the form of movable or immovable property) is prescribed as a business that any bank in Singapore may carry on, or enter into any partnership, joint venture or other arrangement with any person, if such business is carried on under the following arrangement:| (a) | the bank, or the bank’s agent, jointly purchases an asset with the customer at the request of the customer and contributes an amount of money towards the purchase price (the contribution) for the purposes of financing the use or purchase, or both, of the asset by the customer; | | (b) | the bank, or the bank’s agent —| (i) | sells a portion of its share of the asset on a periodic basis to the customer for an amount of money determined at the start of the arrangement (the redemption); and | | (ii) | leases the unsold portion of its share of the asset to the customer for an amount of money determined at the start of the arrangement (the rental); |
| | (c) | in a case where the asset is not in existence at the time of the joint purchase and the bank, or the bank’s agent, leases the unsold portion of its share of the asset to the customer, an amount of money (the advance payment) may be paid by the customer to the bank, or the bank’s agent, for the subsequent use of that portion of the asset; | | (d) | the bank, or the bank’s agent, appoints the customer, or a third party, to take on the obligations in connection with the use of the asset, including its maintenance and insurance; | | (e) | in the event of an early termination of the arrangement, the customer shall purchase from the bank, or the bank’s agent, the remainder of the unsold portion of the bank’s, or the bank’s agent’s, share of the asset at a price determined at the start of the arrangement (the early termination price); | | (f) | upon expiry of the arrangement, the customer shall have purchased from the bank, or the bank’s agent, the whole of the bank’s, or the bank’s agent’s, share of the asset and obtained full ownership of the asset; | | (g) | the total amount payable by the customer for the asset comprising —| (i) | the advance payment; | | (ii) | the redemption; | | (iii) | the rental; and | | (iv) | the early termination price, |
| is greater than the contribution, and the difference between the total amount payable and the contribution is the profit or return to the bank for providing such financing to the customer; |
| | (h) | the bank, or the bank’s agent, does not derive any gain or suffer any loss from any movement in the market value of the asset, including total loss of the asset, other than as part of the profit or return referred to in sub-paragraph (g), except in circumstances provided in sub-paragraph (i); and | | (i) | in a case where the customer is unable to pay the bank, or the bank’s agent, the early termination price, the bank, or the bank’s agent, may sell the asset to a third party at a price lower than the outstanding amount payable by the customer. |
(2) The bank shall notify the Authority of its —| (a) | intention to commence the business referred to in paragraph (1); or | | (b) | commencement of such business within 14 days after the commencement of such arrangement. |
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| Prescribed purchase and sale business at spot price |
23D.—(1) For the purposes of section 30(1)(d) of the Act, and subject to paragraph (2), the business of purchasing and selling assets at spot price is prescribed as a business that any bank in Singapore may carry on, or enter into any partnership, joint venture or other arrangement with any person to carry on, if such business is carried on under the following arrangement:| (a) | for the purposes of effecting payment resulting from the carrying on of any business by the bank under section 30(1)(a), (b) or (c) of the Act —| (i) | the bank undertakes to purchase an asset from a customer (bank purchase undertaking); | | (ii) | the customer undertakes to purchase an asset from the bank (customer purchase undertaking); | | (iii) | the bank undertakes to sell an asset to a customer (bank sale undertaking); or | | (iv) | the customer undertakes to sell an asset to the bank (customer sale undertaking), |
| for an amount of money determined at the time the undertaking is given by the bank or the customer, as the case may be (the agreed price); |
| | (b) | where the bank purchase undertaking is exercised by the customer, or the customer sale undertaking is exercised by the bank, the bank will purchase the asset from the customer at the agreed price in circumstances where the asset is existing at the time of the purchase, and immediately sells the asset to a third party at spot price; | | (c) | where the customer purchase undertaking is exercised by the bank, or the bank sale undertaking is exercised by the customer, the bank will purchase the asset from a third party at spot price in circumstances where the asset is existing at the time of the purchase, and immediately sells the asset to the customer at the agreed price; | | (d) | the bank does not take physical delivery of the asset; and | | (e) | the bank does not derive any gain or suffer any loss from any movement in the market value of the asset other than the difference between the spot price and the agreed price. |
(2) The bank shall notify the Authority of its —| (a) | intention to commence the business referred to in paragraph (1); or | | (b) | commencement of such business within 14 days after the commencement of such business.”. |
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[G.N. Nos. S 622/2005; S 170/2006; S 325/2006; S 238/2007; S 401/2008; S 18/2009] |
