Written Answer by Minister for Law K Shanmugam to PQ on FDWs Taking Loans from Moneylenders in SG
01 Aug 2022 Posted in Parliamentary speeches and responses
Ms Nadia Ahmad Samdin (Member of Parliament for Ang Mo Kio GRC)
To ask the Minister for Law with regard to foreign domestic workers who seek to take loans from moneylenders in Singapore (a) whether there are any due diligence and credit checks currently in place and, if so, what are they; and (b) whether there are safeguards being implemented to ensure that foreigners earning less than $10,000 per annum do not exceed the aggregate loan cap of $500 and, if so, what are they.
- Licensed moneylenders are required by law to conduct due diligence and credit checks. This applies to all individuals who apply for a loan from licensed moneylenders, regardless of whether they are Singaporeans, PRs or foreigners.
- Before granting a loan to an individual, a licensed moneylender must obtain the loan applicant’s personal details and income information from the applicant. The licensed moneylender must also verify the information obtained using genuine and contemporaneous documents (e.g. identification documents, CPF contribution statements, payslips etc.).
- In addition, the licensed moneylender must obtain a credit report of the loan applicant from the Moneylenders Credit Bureau (“MLCB”) to conduct a creditworthiness assessment before deciding if a loan should be granted.
- The MLCB is a central data repository that contains records of borrowers’ loans and repayment with licensed moneylenders. It provides up-to-date details of a borrower’s creditworthiness and indebtedness through its credit reports. This enables licensed moneylenders to make informed and responsible lending decisions, and helps borrowers avoid borrowing beyond their means.
- To ensure that borrowers, including foreign borrowers, do not exceed the applicable aggregate loan cap, such as the $500 cap for foreigners earning less than $10,000 per annum, the credit report from the MLCB will indicate the maximum unsecured loan amount an individual can borrow (based on his/her income level) from all licensed moneylenders combined. If the individual already has outstanding loans with licensed moneylenders, the credit report will indicate the maximum unsecured balance he/she can borrow. In addition, the MLCB system will automatically reject the submission of a loan application if the amount exceeds the maximum unsecured balance.
- The Registry of Moneylenders (“ROM”) also conducts regular inspections on licensed moneylenders to ensure they comply with moneylending laws.
Last updated on 01 August 2022