Advisory committee on moneylending suggests capping loans and interest rates

An advisory committee on moneylending has suggested implementing caps on how much a person can borrow from licensed moneylenders, as well as on the interest rates applied by the moneylenders. -- PHOTO: ST FILE
An advisory committee on moneylending has suggested implementing caps on how much a person can borrow from licensed moneylenders, as well as on the interest rates applied by the moneylenders. -- PHOTO: ST FILE

SINGAPORE - An advisory committee on moneylending has suggested that the total amount of money a person can borrow from licensed moneylenders be capped at four times the monthly salary of the borrower.

Loans for those who earn less than $20,000 a year should be limited to $3,000.

The committee also called for interest rates to be capped at 4 per cent per month and the loan to be paid on a "reducing balance" basis.

The 15-member panel was brought together by the Law Ministry in June to review regulations for the industry and recommend improvements after complaints of excessive borrowing and exorbitant interest rates charged by licensed moneylenders.

It presented its draft recommendations at the Institute of Policy Studies (IPS) Conference on Moneylending on Monday afternoon, to gather feedback before finalising its report.

Chaired by Mr Manu Bhaskaran, director of Centennial Group International and IPS adjunct senior research fellow, the committee is made up of academics and representatives from the moneylending industry and voluntary welfare organisations.