Foreigners living in Singapore, including foreign workers and maids, will be limited in the amount of money they can borrow from licensed moneylenders.
The Ministry of Law (MinLaw) and the Ministry of Manpower (MOM) said in a joint statement yesterday that these foreigners will be subject to new aggregate loan caps when they take loans from the moneylenders, and may apply to be in a self-exclusion framework.
These will better protect foreigners residing here and their employers from the effects of overborrowing, said the statement.
There are currently no loan caps for this group of borrowers.
The changes come after the ministries noted a rise in the number of foreigners borrowing from licensed moneylenders. From 7,500 in 2016, there were 35,000 in the first half of this year alone.
The police have also observed more foreigners here borrowing from unlicensed moneylenders.
The changes will apply to holders of work passes, long-term visit passes, short-term visit passes, dependant's passes and student passes.
To complement these measures, the MOM will impose administrative penalties on foreign work-pass holders who borrow from unlicensed moneylenders.
The penalties, which will be implemented next year, can result in the work pass being revoked, repatriation and the holder being barred from further employment.
The MOM and the police will also step up efforts to educate foreign work-pass holders on the risks of borrowing.
Currently, the Moneylenders Rules limit the amount of unsecured credit any single licensed moneylender can lend to Singapore citizens or permanent residents (PRs).
In January, MinLaw announced changes to the Moneylenders Act that will introduce aggregate loan caps for Singapore citizens and PRs. Under these caps, to be implemented later this year, those with an annual income of less than $20,000 may borrow up to $3,000 from all moneylenders combined.
Those who earn more than $20,000 a year may borrow up to six times their monthly income from all moneylenders combined.
Meanwhile, for foreigners residing here, a lower aggregate loan cap of $1,500 will be set for those earning less than $10,000 annually.
Foreigners who earn between $10,000 and $20,000 a year can borrow up to $3,000. Those who earn at least $20,000 can borrow six times their monthly income.
These new loan caps for foreigners will kick in at the same time as those for Singaporeans and PRs.
MinLaw will also introduce a self-exclusion framework which will stop licensed moneylenders from giving loans to Singapore residents and foreigners who have applied for self-exclusion.
The new restrictions and framework will help foreign workers borrow within their means and take their loans more seriously, said Mr Hooi Yu Koh, chief executive officer of construction company Kori Holdings.
He said it is not unheard of for workers to get into trouble after defaulting on their loans from licensed and unlicensed moneylenders. "This also causes complications for the employers," he said.
He said that while workers borrowing money is "not a good sign", he welcomed the changes overall. "If they need to borrow money (from licensed moneylenders), at least there's a cap. In the worst-case scenario, the amount can be more easily paid back."
He said the penalties - such as repatriation and being barred from further employment - will deter workers from borrowing from loan sharks.