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Loans for low-income foreigners, maids, capped at S$500 under new licensed moneylending rules

Loans for low-income foreigners, maids, capped at S$500 under new licensed moneylending rules

File photo of Singapore currency notes. (Photo: TODAY)

SINGAPORE: Low-income foreigners will only be allowed to take a maximum loan of S$500 from licensed moneylenders, as the Ministry of Law on Monday (Jul 15) announced further restrictions on the amount they can borrow.

Currently, foreigners earning less than S$10,000 annually are allowed to borrow up to S$1,500 from all licensed moneylenders combined.

From Tuesday, the loan cap will be lowered to S$500.

“With the existing cap on borrowing cost at 100 per cent of the loan principal, this ensures that the maximum repayable amount (loan principal and all permitted interest and fees) is kept to a more manageable S$1,000 at any one point,” said MinLaw in a media release.

READ: Loan caps for those borrowing from moneylenders to take effect end-November

READ: Work pass holders who borrow from unlicensed moneylenders to face repatriation

The new regulation was among several measures announced on Monday to stem the increase in cases of moneylenders targeting work pass holders.

There has also been an increase in work pass holders acting as guarantors for one another in taking up loans, said MinLaw. These guarantors then become liable for the debt if borrowers default on the loan.

To address these issues, moneylenders will no longer be allowed to accept foreigners as guarantors.

Moneylenders will also not be allowed to display advertisements such as "Domestic helpers are welcome", said MinLaw. "This will reduce the visibility of easy credit to vulnerable work pass holders.”

In addition, the Manpower Ministry will take enforcement action against work pass holders who are found to have brokered or facilitated loans for gains. Offenders could have their work passes revoked.

READ: Borrowing, brokering, lending: Inside the tangled web of maids and moneylenders

READ: Maids could turn to loansharks if employers' consent needed to borrow money from licensed moneylenders: MOM

From Aug 15, moneylenders will not be allowed to lend to more than 300 foreign borrowers or extend more than S$150,000 in total principal loans to foreigners at any point in time.

They also cannot grant loans to more than 15 foreign borrowers a month, and cannot lend money to more than 50 foreign borrowers a year.

Those whose loan books are at or in excess of these caps will not be allowed to continue lending to foreigners. 


The number of foreigners borrowing from licensed moneylenders has risen sharply over the past three years, said MinLaw.

In the first half of this year, 53,000 foreign borrowers have taken loans from licensed moneylenders compared to 55,000 borrowers in 2018. The number was 19,000 in 2017 and 7,500 in 2016, said the ministry.

The number of work pass holders acting as guarantors has also risen from about 50 in 2016 to about 6,000 last year.

The new rules are a tightening of restrictions that were introduced last year.

The self-exclusion system which was announced last October for borrowers to opt out of taking additional loans takes effect on Monday, said the ministry. 

In a media statement, the Centre for Domestic Employees (CDE) said it welcomes the "comprehensive" measures.

It noted that based on a recent study, 63 per cent of maids interviewed said they borrowed primarily for family emergencies back home. About 20 per cent borrowed to meet their lifestyle needs while 13 per cent became guarantors for their fellow maids and landed in debt themselves when their friends became uncontactable.

“CDE believe that the new measures announced today will further help control such borrowing situations,” said the centre, which was set up by the labour movement to help domestic workers.

“To equip FDWs (foreign domestic workers) with financial literacy knowledge, CDE will continue to educate our FDWs on effective money management.”


The Credit Association of Singapore (CAS), which represents licensed moneylenders, said it believes that the new measures “will be devastating to the industry – lenders and borrowers alike”.

While it understands the importance of protecting vulnerable workers, and supports the S$500 aggregate loan cap for low-income foreigners, the association is taking issue with the caps on the supply of unsecured loans to foreigners.

This is because the restrictions take into account all foreigners regardless of income bracket. For example, if a borrower with an annual income above S$10,000 secures a loan – he or she will still count towards the moneylender’s cap of 50 foreigners a year.

Calling this a “blanket approach for all foreigners”, campaign executive of CAS Julian Tan said that this will be “devastating” for companies which focus on lending to foreigners.

“Mind you, some of these companies may not lend to foreign domestic workers. They may lend foreign workers whose earning capacity will be more than S$20,000 per annum. Some of these individuals are very high income, going to the range of six-digit figures. If you limit these individuals from ever getting a loan, there’s a very high chance that these (people) are the right pickings for loan sharks,” said Mr Tan.

The association added that it believes most, if not all foreigners may not be able to borrow money from licensed moneylenders from Aug 15 due to the caps on supply.

The Law Ministry estimates that more than half of the 158 licensed moneylenders in Singapore have exceeded one or more of the four caps.

Additional reporting by Lee Li Ying.

Source: CNA/ad(gs)


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