This year, a new Bill was passed by the Parliament to facilitate a more secure process when it comes to moneylending in Singapore. Named as the Moneylenders (Amendment) Bill, it protects Singaporean and PR borrowers from unlicensed moneylenders, and seeks to modify all moneylenders in Singapore into legal businesses.
In total the Bill lays out three principles that private loan lenders Singapore are to cooperate on. They are as follows:
A new loan cap as a means to prevent borrowers from excessive borrowing
A new loan cap has been issued out that dictates how much borrowers are allowed to borrow from moneylenders. The previous system allowed the borrower to borrow from multiple moneylenders with a limit on how much they can borrow from each moneylender.
With the new implementation, there is now an aggregate loan cap that limits the amount of money that the borrower is seeking to borrow and prevents moneylenders from offering loan extensions. Now, the practice is that the borrower may only borrow a limited amount of money from multiple moneylenders combined. They are not allowed to ask for more money if their total amount borrowed from multiple moneylenders is higher than their cap limit.
In specific:
- A single borrower may borrow no more than $3,000 if their annual income is less than $20,000.
- A single borrower may borrow no more than six times of their monthly income from multiple moneylenders.
Furthermore, all moneylenders are to acquire a credit report from the Moneylenders Credit Bureau (MLCB), on any borrower that seeks to borrow money from them. This is to check if the borrower has previously borrowed an amount of money that is past their cap limit.
Toughen the guidelines set in place for moneylenders
In addition to the new loan cap, the Bill also gives the Registry of Moneylenders, who is in charge of the recording and managing the moneylenders in Singapore, the power to remove any individual that they regard as “unsavoury” within the moneylending industry:
- Approval from the Registrar needs to be given before someone is allowed to become a confirmed stakeholder in a moneylending business.
- Approval from the Registrar needs to be given before moneylenders are allowed to hire loan assistants.
- The Registrar has the authority to revoke their approval if they find a particular individual to be of unsavoury nature.
Managing the moneylenders
Lastly, to improve the openness and accountability in the moneylending industry, the Bill requires all Singapore moneylenders to be registered as licensed businesses. They are also to submit yearly accounts that have been audited to the Registrar.
