New rules for licensed loans to foreigners

New rules for licensed loans to foreigners

• Caps on the supply of unsecured loans to foreigners: A licensed moneylender may not lend to more than 300 foreigners or extend more than $150,000 in total principal loans to foreigners at any point in time. They also cannot grant loans to more than 15 foreign borrowers a month, and cannot lend money to more than 50 foreign borrowers a year.

• Licensed moneylenders cannot accept foreigners as guarantors: To prevent work pass holders becoming liable for the debt if borrowers default on a loan, licensed moneylenders will not be allowed to accept foreigners as guarantors.

• No targeted advertising at vulnerable groups: Licensed moneylenders will not be allowed to display advertisements such as "Domestic helpers are welcome". This will reduce the visibility of easy credit to vulnerable work pass holders.

• No loans to be facilitated by unauthorised third parties: Loans brokered or facilitated by unauthorised third parties without the requisite work permit or authorisation cannot be granted by licensed moneylenders. The Ministry of Manpower will also take action against work pass holders who broker or facilitate loans for gains.

• No cross-referral of borrowers between lenders: Licensed moneylenders cannot refer borrowers to other lenders. This is to protect vulnerable borrowers and prevent lenders from circumventing the new supply caps.

A version of this article appeared in the print edition of The Straits Times on July 16, 2019, with the headline 'New rules for licensed loans to foreigners'. Print Edition | Subscribe