- Kyle Chua
Grab & Singtel Backed Singapore Bank Offers Instant $200 Loan With High Late Payment Interest
Updated: Dec 19, 2023
Singapore-based GXS Bank has launched GXS FlexiLoan, a new personal loan option in the country that caters to underbanked digital natives with more unique financial needs.
The Grab- and Singtel-backed digital bank on Tuesday, 25 April started offering instant loans of as low as S$200 on its app, and borrowers can apply with tenures as short as two months, making it the perfect option for those belonging to the gig economy. The company further touted that the loan doesn't require any collateral, and borrowers can pay it back partially, or in full, as soon as they like without incurring early repayment fees.
"You are in absolute control of the amount that you want to borrow, and how long you want to borrow," said GXS CEO Charles Wong. "You know all the information that you need to make the decision before you apply."
Interest rates start from 3.8% per annum, which works out as a compound interest rate of 7.15%, based on borrowers' local credit scores, along with original risk assessments from their history with Grab and Singtel. However, unlike other bank loans, the interest is calculated daily on a non-compounded basis, which means the interest is charged only on the outstanding loan balance on a given day. That also means borrowers who pay earlier can stand to save on their interest payments. On the other hand, for late payments, interest defaults to a rate of 18% per annum.
"When faced with such hurdles, they may look for quick fixes which may not be financially prudent for them, such as taking on alternative loans with higher interest rates or hidden fees that may snowball," said Jenn Ong, Head of Credit Products at GXS.
To be eligible for the loan, borrowers must meet certain regulatory requirements in Singapore, such as being at least 21 years old and a minimum annual income of S$20,000.
GXS began operations last year after securing a full digital banking licence from Singapore's central bank, the Monetary Authority of Singapore (MAS). It started offering 0.08% interest in its regular savings accounts, with fixed deposit accounts enjoying an extra 3.48%. It also doesn't require a minimum account balance for its savings accounts.
For now though, the digital bank's customers are limited to Grab and Singtel customers. It also has a ceiling of SG$50 million for its aggregate deposits and SG$75,000 per individual, as set by MAS. GXS is hoping the central bank can raise the deposit cap soon.
GXS Bank started offering instant loans of as low as S$200 on its app, and borrowers can apply with tenures as short as two months.
The company touted that the loan doesn't require any collateral, and borrowers can pay it back partially, or in full, as soon as they like without incurring early repayment fees.
Interest rates start from 3.8% per annum, which works out as a compound interest rate of 7.15%, based on borrowers' local credit scores, along with original risk assessments from their history with Grab and Singtel.