MinLaw considering measures to complement MAS' cap on unsecured loans
- POSTED: 20 Jan 2014 17:33
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Senior Minister of State for Law Indranee Rajah said the government is also reviewing whether interest rate caps should be extended to loans for higher income earners.
SINGAPORE: The Law Ministry is considering measures to complement the Monetary Authority of Singapore's recently-introduced cap on unsecured borrowing from financial institutions.
Senior Minister of State for Law Indranee Rajah said in Parliament on Monday that the government is also reviewing whether interest rate caps should be extended to loans for higher income earners.
The purpose is to ensure that borrowers do not over-extend themselves.
In addition, the Law Ministry is reviewing if there is a need to limit the number of moneylenders in any geographical location.
There are currently no such limits.
Ms Indranee said, however, that Singapore is not such a big country that travelling costs alone would effectively deter borrowing from moneylenders.
She said the government's approach is to maintain a balance in allowing borrowers reasonable access to credit from licensed moneylenders and providing them, especially those of lower income, with adequate protection.
Ms Indranee said the number of licensed moneylenders has fallen from 249 in 2011 to 209 in 2012, as no new licences have been granted since the Law Ministry imposed a moratorium on new licences.
She said: "The government agrees with the concern about excessive borrowing and credit being too accessible to borrowers. However, if legal access to credit is completely cut off, the consequences will be worse. Borrowers will be driven to seek loans from unlicensed moneylenders or other illegal sources. If people need money, they will try and find a way to borrow."