2. The Banking Regulations (Rg 5) are amended by inserting, immediately after regulation 23D, the following regulation:| “Prescribed procurement business |
23E.—(1) For the purposes of section 30(1)(d) of the Act, and subject to paragraph (2), the business of procuring and selling 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 to carry on, if such business is carried on under the following arrangement:| (a) | the bank, or the bank’s agent, at the request of the customer and for the purposes of financing the procurement and the use or purchase, or both, of an asset by the customer, commissions the customer to construct the asset in accordance with the customer’s specifications for an amount of money (the purchase price); | | (b) | contemporaneously with the commissioning referred to in sub-paragraph (a) —| (i) | the bank, or the bank’s agent, and the customer enter into an arrangement prescribed under regulation 23B where the asset is not in existence at the time the asset is leased to the customer (the lease arrangement); or | | (ii) | the customer gives an undertaking to the bank, or the bank’s agent, to purchase the asset from the bank, or the bank’s agent, immediately after the transfer of the ownership of the asset to the bank, or the bank’s agent, by the customer under sub-paragraph (e)(i) (the purchase undertaking); |
| | (c) | the customer procures the construction of the asset by a third party; | | (d) | the bank, or the bank’s agent, makes payment of the purchase price to the customer on a periodic basis (the progress payment); | | (e) | one of the following takes place:| (i) | the customer transfers the ownership of the asset to the bank, or the bank’s agent, on a mutually agreed date on or after the completion of the construction of the asset by the third party; | | (ii) | the customer refunds all progress payments to the bank, or the bank’s agent, and the lease arrangement or the purchase undertaking, as the case may be, is cancelled; or | | (iii) | the bank, or the bank’s agent, agrees to the substitution of the asset that is the subject of the lease arrangement or the purchase undertaking with a comparable asset, and the customer transfers the ownership of the comparable asset to the bank, or the bank’s agent, on a mutually agreed date; |
| | (f) | the bank, or the bank’s agent, does not take physical delivery of the asset or the comparable asset; | | (g) | at the end of the arrangement, the bank, or the bank’s agent, transfers ownership of the asset, or of the comparable asset, to the customer pursuant to the lease arrangement or the purchase undertaking, except in the circumstances referred to in sub-paragraph (e)(ii);; | | (h) | the amount payable by the customer for the asset, or the comparable asset, is greater than the purchase price, and the difference between the total amount payable and the purchase price is the profit or return to the bank for providing such financing to the customer; and | | (i) | 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 from the total loss of the asset, other than the profit or return referred to in sub-paragraph (h). |
(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; S 203/2009; S 360/2009] |
