In the latest move to regulate the industry, Parliament yesterday (8 Jan) approved changes to the Moneylenders Act which, among other things, set an overall loan ceiling.
This is a departure from the current practice of caps, which restricts how much one can borrow from individual money lenders. This tightening of the law comes as the amount of outstanding debt owned is showing a significant upward trend. Senior Minister of State of Law Indranee Rajah said that those earning less than $20,000 a year cannot borrow more than $3000, while the maximum loan for all borrowers is six times their monthly income. Currently, a small proportion of Singaporeans, about 2%, over borrow—which is defined as having an outstanding balance that is more than the upcoming ceiling.
In future, moneylenders will have to get a borrower’s credit report from the Moneylenders Credit Bureau before giving a loan. They are required to update the Bureau on repayments as well. To make the industry more professional, moneylenders have to incorporate as companies and submit annual audited accounts to the Registry of Moneylenders.
Source: "Parliament: Changes to loan limits to help nip over-borrowing" (The Straits Times, 9 Jan 2018)