What is the definition of prime rates and floating rates?

The prime rate is the lowest lending rate which a bank is prepared to lend in Singapore Dollars to its best customers on an overdraft or demand basis. A floating rate is one which is not fixed, and is pegged to an index rate, e.g. Prime + 1%, and "floats" according to the movements in the index rate.

How do banks in Singapore derive their prime rates?

Prime rates are determined by banks based on their cost of funds, plus a spread to cover credit risks, operating expenses and a desired return on shareholders' funds.

Are there any upper and lower limits that banks peg their prime rates to?

There are no upper or lower limits for banks to peg their prime rates to. However, all banks must notify the Monetary Authority of Singapore in advance of any changes in their prime rates.

Why is it that when banks slash interest rates for deposits, the cuts are substantial but when they reduce their prime rate, the reduction appears to be minimal?

Prime and deposit rates reflect market conditions including the level of interbank rates. Generally, banks do not lend money based on their prime rate alone. Increasingly, banks are charging interest based on interbank rates. Furthermore, not all deposits are used to fund prime-pegged loans. Neither do banks necessarily fund prime-pegged loans with only deposits.

If the maturity date of my Fixed Deposit falls on a non-working day (eg Sunday, public holiday), would I be paid interest for that non-working day?

When the maturity date of the Fixed Deposit falls on a non-working day, the maturity date will be moved to the next working day and interest paid accordingly for the non-working day(s). Should a public holiday be declared at short notice after the placement and before the maturity date, the bank will similarly adjust the maturity date and pay interest.

Can ABS look into the practices of those banks which impose high interest rates and service charges on their customers?

ABS does not control interest rates and bank charges. Banks are free to set their own rates and charges, and do so in a competitive marketplace. Customers have a wide choice of banks and are encouraged to shop around for the best deal.

What is SIBOR?

SIBOR stands for Singapore Interbank Offered Rates. An individual ABS SIBOR contributor bank contributes the rate at which it could borrow funds, were it to do so by asking for and accepting inter-bank offers in a reasonable market size, just prior to 1100 hrs.