The upcoming launch of the Moneylenders Credit Bureau is a positive move in encouraging transparency across moneylenders and increasing financial literacy and responsibility among consumers using such services ("Licensed moneylenders to get access to borrowers' data"; last Thursday).
Consumers are more likely to turn to moneylenders for three main reasons:
•When they do not qualify for a loan issued by the bank (possibly because of low income, poor credit ratings or being a foreigner with a short employment history);
•If they are overstretched and have existing loans and debts with banks;
•To facilitate their gambling addiction or other impulse purchases.
The new credit bureau will ensure that moneylenders are performing their due diligence before lending money to consumers.
These measures will see more customers shopping around for loans and alternative options before resorting to borrowing from moneylenders.
Better yet, they may even reconsider if they need to borrow in the first place.