As regulation in the licensed moneylending industry tightens, registered moneylenders have been feeling the heat. There have been fewer licensed moneylenders over the years - from 249 in 2011 to 163 last year, according to statistics from the Ministry of Law website.
The introduction of the Moneylenders (Amendment) Bill on Monday in Parliament comes after earlier controls implemented in 2015 - such as imposing a maximum 4 per cent monthly interest rate on all borrowers - following recommendations by the Advisory Committee on Moneylending.
Moneylender's Association of Singapore president Peter Tan said not all moneylenders leave the industry because of the stricter rules. "Rent and staffing issues can be a problem. It is hard to find employees because of the social stigma associated with the industry."
Unwarranted competition from loan sharks has also played a part. "These loan sharks advertise and contact people via messages and calls, which we licensed moneylenders are not allowed to do," Mr Tan said, adding that borrowers should not take loans through this avenue.
The proposed changes in the Bill will, among other things, require all moneylenders to be incorporated as companies and submit annual audited accounts to the Registry of Moneylenders. Over two-thirds of the 160-plus licensed moneylenders have registered as companies.
While the changes will help to professionalise the industry, some moneylenders, such as Unilink Credit director Daphne Tan, feel the squeeze from the stricter rules.
"Public sentiment is that moneylenders are the bad guys, but there are many moneylenders who play by the rules. Unfortunately, it seems the laws are all for protecting borrowers and are unbalanced in protecting moneylenders," she said.
Her firm does checks on potential borrowers to ensure they have good credit ratings and a history of repaying loans, but some borrowers exploit loopholes in the law to escape payment. She has seen cases where people take out loans and declare bankruptcy in the weeks after.
"It's tough to do business. There are good borrowers and bad borrowers, good moneylenders and bad moneylenders. The good moneylenders do feel penalised."
Tan Tam Mei