AMID calls for tighter controls on licensed moneylending and complaints of excessive borrowing and exorbitant interest rates, the Law Ministry has brought together an advisory committee to review regulations for the industry and recommend improvements.
Dr Beh Swan Gin, the ministry's Permanent Secretary, said of the 15-member panel's challenge yesterday: "It is not an easy task to maintain the balance between protecting consumers and preserving their access to credit."
The committee will be looking at restricting the total amount a person can borrow, as well as capping interest rates.
Existing regulations limit only the sum a person can borrow from each moneylender. And these caps apply only to borrowers who earn less than $120,000 a year and seek unsecured credit - which is not backed up by property or other collateral.
Interest rate caps apply only to borrowers earning less than $30,000 a year.
The Straits Times understands that the authorities are looking to set up a Moneylenders Credit Bureau, which moneylenders must use to run compulsory credit checks on potential borrowers.
The committee will also look into restricting fees charged by moneylenders, who may now impose charges each time a loan or interest payment arrives late, or even when the money is returned early.
The authorities have stopped issuing new licences to moneylenders since 2012. That year, there were more than 200 licensed moneylenders here.
Although moneylenders give out less than 1 per cent of consumer loans, several MPs have called for tougher regulations in recent months, highlighting concerns over excessive borrowing and punitive interest rates.
In March, Pasir Ris-Punggol GRC MP Zainal Sapari cited the example of a security guard who had to repay $2,240, five weeks after taking out a loan of $1,600 - an interest rate of 40 per cent.
Yesterday, he said he hopes the committee will also look into restricting the number of moneylenders operating in any one area, and at better ways to educate borrowers.
The committee, which starts work next Wednesday, is chaired by Mr Manu Bhaskaran, director of strategic and policy advisory firm Centennial Group International, and vice-president of the Economics Society of Singapore.
It will submit its recommendations to the ministry by the end of the year.
Besides academics and representatives from the moneylending industry, such as Moneylenders Association of Singapore president David Poh, the group also comprises voices from voluntary welfare organisations that help distressed borrowers.
These include Credit Counselling Singapore president Kuo How Nam, and Mr Christopher Chuah, president of One Hope Centre's executive committee.
Get the full story from The Straits Times.
Did you know?
- Moneylenders in Singapore give out less than 1 per cent of consumer loans
- Existing regulations limit only the sum a person can borrow from each moneylender. These caps apply only to borrowers who earn less than $120,000 a year and seek unsecured credit.
- Interest rate caps apply only to borrowers earning less than $30,000 a year.