Stricter loan caps for licensed moneylending to kick in on Nov 30

Under the first phase of implementation, aggregate loan caps will be set to limit the amount Singapore citizens, permanent residents and foreigners living in Singapore can borrow from all licensed moneylenders combined.
Under the first phase of implementation, aggregate loan caps will be set to limit the amount Singapore citizens, permanent residents and foreigners living in Singapore can borrow from all licensed moneylenders combined.PHOTO: ST FILE

SINGAPORE - New rules limiting the amount that 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) on Friday (Nov 16).

Under the first phase of implementation, aggregate loan caps will be set to limit the amount Singapore citizens, permanent residents as well as foreigners residing in Singapore 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 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 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 (MLCB) will also be implemented, where licensed moneylenders must obtain a borrower's credit report from the bureau - a central repository of data on borrowers' loans and repayment records - before granting any loan.

 

Moneylenders will also be required to submit accurate borrower information to the bureau and provide it with timely updates when borrowers repay their loans.

Obligations will also be placed on the MLCB and licensed moneylenders to ensure the confidentiality, security and integrity 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 of the self-exclusion system will be given in due course.

To prevent undesirable characters from entering the moneylending industry, the law will require licensed moneylenders to get the approval of the Registrar of Moneylenders before employing or engaging any assistant in the business. This will strengthen the regulation of licensed moneylenders, said MinLaw.

The Registrar's approval will also be needed before anyone can become a substantial shareholder of, or increase his or her substantial shareholdings in, a licensed moneylender.

The second phase of implementation to professionalise the moneylending industry will take effect from the first quarter of 2019.

This will include requiring all licensed moneylenders to be incorporated as companies limited by shares with a minimum paid-up capital of $100,000, and to submit annual audited accounts to the Registry of Moneylenders.

"Together, these improvements to the moneylending regime will help to ensure that borrowers have safe access to personal credit," said MinLaw.