SINGAPORE - Foreigners living in Singapore will be subject to new aggregate loan caps and the self-exclusion framework for borrowing from licensed moneylenders, the Ministry of Law (MinLaw) and Ministry of Manpower (MOM) said in a joint statement.
This will better protect foreigners residing here and their employers from the effects of over-borrowing, the ministries said on Thursday evening (Oct 4).
The loan caps and self-exclusion framework will apply to foreigners who are holders of Work Passes, Long Term Visit Passes, Short Term Visit Passes, Dependant's Passes and Student Passes. It will not apply to those with a temporary presence in Singapore, such as tourists.
To complement these measures, the MOM will impose administrative penalties on foreign work pass holders who borrow from unlicensed moneylenders.
When a work pass holder is found to have borrowed from an unlicensed lender, the MOM will inform the employer and revoke the work pass. The worker will be repatriated and prohibited from further employment in Singapore.
The MOM and the police will also step up education efforts for foreign work pass holders on the risks of borrowing, the statement added.
The changes come after the ministries noted an increase in the number of foreigners borrowing from licensed moneylenders. From 7,500 in 2016, the number rose to 35,000 in the first half of 2018 alone.
The police have also observed more foreigners here borrowing from unlicensed moneylenders, said the statement.
At present, the Moneylenders Rules limit the amount of unsecured credit any single licensed moneylender may lend to Singapore citizens or permanent residents.
The Straits Times understands that there are currently no loan caps for foreigners residing in Singapore.
In January this year, MinLaw announced amendments to the Moneylenders Act that will introduce aggregate loan caps to better protect borrowers who are Singapore citizens and permanent residents (PRs), while allowing for reasonable and safe access to licensed moneylending credit.
Under this cap, which will be implemented in the fourth quarter of 2018, 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 in Singapore, a lower aggregate loan cap of $1,500 will be imposed on those who earn less than $10,000 annually.
Foreigners who earn between $10,000 and $20,000 a year can borrow up to $3,000, and those who earn at least $20,000 can borrow six times their monthly income.
These new loan caps for foreigners residing in Singapore will kick in at the same time as those for Singapore citizens and PRs.
MinLaw will also introduce a self-exclusion framework which will stop licensed moneylenders from extending loans to Singapore citizens and permanent residents who have applied for self-exclusion.
This framework will also be made available to foreigners residing in Singapore and will be implemented in 2019.