New rules limiting the amount a person may borrow from all licensed moneylenders combined will come into force on Nov 30.
The first phase of the Moneylenders (Amendment) Act 2018 and Moneylenders (Amendment) Rules 2018 will kick in at the end of this month to provide better protection for borrowers, said the Ministry of Law (MinLaw) yesterday.
Under the first phase, aggregate loan caps will be set to limit the amount Singapore citizens, permanent residents and foreigners residing here can borrow from all licensed moneylenders combined.
Under these caps, Singapore citizens and permanent residents with an annual income of less than $20,000 may borrow only up to $3,000.
Those who earn more than $20,000 a year may borrow up to six times their monthly income.
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.
A regulatory framework for the Moneylenders Credit Bureau will also be implemented, where licensed moneylenders must obtain a borrower's credit report from the bureau before granting any loan.
Obligations will also be placed on the bureau and licensed moneylenders to ensure the confidentiality and security of borrower data.
The new rules also provide for a self-exclusion framework, to help borrowers regulate their borrowing behaviour and participate in debt assistance schemes which typically require self-exclusion.
Licensed moneylenders are prohibited from lending to any individual who has applied for self-exclusion.
More details on the system will be given in due course.
To prevent undesirable characters from entering the moneylending industry, licensed moneylenders will need to get the approval of the Registrar of Moneylenders before hiring any employee.
The registrar's approval will also be needed before anyone can become a substantial shareholder of, or increase substantial shareholdings in, a licensed moneylender.
The second phase of implementation to professionalise the moneylending industry will take effect from the first quarter of next year.
This will include requiring all licensed moneylenders to be incorporated as companies and submit annual audited accounts.
"Together, these improvements to the moneylending regime will help to ensure that borrowers have safe access to personal credit," said MinLaw.