The Ministry of Law is considering additional measures to strengthen the moneylenders' regulatory regime, as well as complement the Monetary Authority of Singapore's 12 months' income limit on unsecured borrowings from financial institutions, Law and Foreign Affairs Minister K. Shanmugam said on Monday.
He did not give further details on the proposed measures in his Facebook post which discussed concerns over the ease of access to licensed moneylenders in the heartlands. The Straits Times reported last week that the presence of licensed moneylenders has increased in towns such as Toa Payoh, Ang Mo Kio and Tampines. In Toa Payoh, for instance, 16 credit companies have set up shop in the town centre. There was just two such licensed moneylenders in the entire estate in 2009.
There are now 206 licensed moneylenders in Singapore, compared with 173 five years ago. Mr Shanmugam, in his Facebook post, noted that the Ministry of Law has imposed a moratorium on new licences for moneylenders since 2012.
"I agree with the concern about not making credit too accessible. At the same time if legal access to credit is completely cut off, then borrowers will seek loans from unlicensed moneylenders or other illegal sources," he wrote. "What the law can do is to try and protect vulnerable borrowers."
For example, current protections include interest rate caps for those with annual income below $30,000, borrowing caps for unsecured loans and a minimum age of 18 years and above for borrowers, he noted. Moneylenders are also required to explain the terms of the loan to the borrowers, including all fees, charges, and interest rates. They are not allowed to advertise in mass media, and are prohibited from promoting their business through unsolicited communications.
"These measures are on top of several criteria moneylenders have to meet before their licences are granted," he added, namely that would-be moneylenders have to be of good character to manage the business and the placement of a security deposit to ensure the proper conduct of the business, among others.