More bankruptcies here are arising from licensed moneylending activities, according to a report submitted to Parliament by the Estimates Committee yesterday.
The report showed the proportion of bankruptcy orders with proofs of debt filed by licensed moneylenders jumped from 7.3 per cent in 2012 to 10.5 per cent in 2013.
There were 210 of these bankruptcy orders in 2013, up from 128 in 2012 and 80 in 2011.
Marine Parade GRC MP Seah Kian Peng said this trend might be due to the number of licensed moneylenders here peaking in 2011, when they numbered 249.
As of 2013, there were 200 licensed moneylenders.
"Due to the increased access to licensed moneylenders then, the number of bankruptcies arising from that naturally increased, following a time lag," said Mr Seah.
He said the Estimates Committee is concerned that the "amount of lending was on the rise" and stressed the need for measures, such as restricting access to lenders and lowering interest rates, to ensure that "vulnerable groups who need the service of moneylenders are adequately protected".
He added that "licensed moneylenders still have an important role to play", as the alternative would be for people to borrow from unlicensed lenders, which would be harder for the Government to monitor.
The report expressed concern that the growth of businesses such as pawnbroking and moneylending, especially in the heartland, might indicate a growing number of such transactions among vulnerable groups like lower-income Singaporeans.
It noted that although the number of licensed moneylenders had declined from 2011 to 2013, the total value of loans has dipped only slightly from $480 million to $478 million in the same period.
The number of pawnbrokers has also almost doubled since 2006, and the value of loans they have granted increased from $1.6 billion in 2006 to $7.1 billion in 2012, before declining to $5.5 billion in 2013.
Mr Maximilian Koh, director of Thye Hua Kwan Problem Gambling Recovery Centre, said: "We have seen more of those seeking help for gambling turn to licensed moneylenders, thinking there is some form of control there.
"Many of them, at the point of desperation, borrow without realising that the interest rate is as high as (those offered by) loan sharks."
In November last year, a government advisory committee proposed a 4 per cent cap on interest rates, which moneylenders protested against as being too restrictive.
Mr David Poh, president of the Moneylenders' Association of Singapore, said: "The previous lack of a cap might have led to the rise in bankruptcies, with high interest rates going off the hook."
He added that the association was working with the Ministry of Law on instituting a 4 per cent interest rate cap with an additional 4 per cent late charge.
"If there's no cap at all, it's not fair on borrowers," said Mr Poh. "But if you don't have a late charge, borrowers won't pay on time."