Today, the Ministry of Law (MinLaw) announced plans to extend the aggregate loan caps and the self-exclusion framework for borrowing from licensed moneylenders for Singapore Citizens (SCs) and Permanent Residents (PRs) to all foreigners residing in Singapore, to better protect them and their employers from the effects of over- borrowing.

To complement these measures, the Ministry of Manpower (MOM) will impose administrative penalties on foreign work pass holders who borrow from unlicensed moneylenders.

MOM and the Police will also step up their education efforts for foreign work pass holders on the risks of borrowing.

Extending Protections for Borrowers of Licensed Moneylenders

Currently, the Moneylenders Rules limit the amount of unsecured credit any single licensed moneylender may lend to any SCs or PRs.
In January 2018, MinLaw announced amendments to the Moneylenders Act to introduce aggregate loan caps to better protect borrowers while allowing for reasonable and safe access to licensed moneylending credit. The caps, which will be implemented in 4Q 2018, are:

  1. Individuals earning up to $20,000 a year may borrow up to $3,000 from all moneylenders combined; and
  2. All other individuals may borrow up to six times of monthly income from all moneylenders combined.

Since January 2018, MinLaw has been working with the Moneylenders Credit Bureau (MLCB), the industry, and Voluntary Welfare Organisations (VWOs) to prepare for the changes.

This includes developing a self-exclusion framework to help individuals regulate their own borrowing and take part in debt assistance schemes.

At the same time, MinLaw and MOM observed an increase in the number of foreigners borrowing from licensed moneylenders in recent times, from 7,500 in 2016 to 35,000 in the first half of 2018 alone.
The Police also observed more foreigners residing in Singapore borrowing from unlicensed moneylenders.

The borrower protections will apply to foreigners who are holders of Work Passes, Long Term Visit Passes, Short Term Visit Passes, Dependant’s Passes, and Student Passes.
They will not apply to foreigners with a temporary presence in Singapore, such as tourists.


Extension of Aggregate Loan Cap to Foreigners Residing in Singapore

To better protect foreigners residing in Singapore, MinLaw will extend the aggregate loan caps for borrowing from licensed moneylenders, to these foreigners. We will also impose a lower aggregate loan cap of $1,500 for all foreigners residing in Singapore who earn less than $10,000 annually. The following aggregate loan caps will apply:

Facilitating Self-Exclusion from Borrowing

MinLaw will be introducing a self-exclusion framework which will prohibit licensed moneylenders from lending to SC/PRs who have applied for self-exclusion.

This framework will help borrowers regulate their borrowing behaviour, and participate in debt assistance schemes which typically require self-exclusion. The self-exclusion framework will also be made available to foreigners residing in Singapore.

Other Existing Protections under the Licensed Moneylending Regime

Other borrower protections under the licensed moneylending regime already apply across the licensed moneylending industry. These include restrictions on advertising3, borrowing cost caps, and mandatory credit report checks prior to granting any moneylending loan.

Applications can be submitted online to the MLCB. An individual’s self-excluded status will be displayed in credit reports that licensed moneylenders are required to retrieve before issuing any loan.

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