Draft Moneylenders Bill released for public feedback - Singapore
New bill to relax some controls, enhance regulation
By LYNETTE KHOO
(SINGAPORE) The government yesterday released a draft Moneylenders Bill (MLB) 2008 for public consultation. The bill will replace the current Moneylenders Act (MLA).
The bill, if passed, will relax some existing controls on moneylending and enhance the regulatory and enforcement framework. One major change being proposed involves doing away with a cap on interest rates that a licensed moneylender can charge.
The Ministry of Law said the review of the MLA was prompted by major changes in the moneylending landscape.
Moneylenders who are licensed by the Monetary Authority of Singapore will continue to be exempted under the MLB. So, too, would be persons who grant staff loans and persons who grant loans to corporations or loans to accredited investors as defined under Section 4A of the Securities and Futures Act.
Among the controls that will be removed is the restriction for licensed moneylender to operate only from one location. Under the new bill, it can operate from more than one location with prior approval from the Registrar of Moneylenders and subject to conditions.
The MLB will also remove the cap on interest rate that a licensed moneylender can charge, which is currently 18 per cent per annum for unsecured loans and 12 per cent per annum for secured loans.
The prohibition against the charging of compounded interest will be removed, in line with the practices of financial institutions. Under the new bill, the Minister has more discretion to prescribe different interest rates for different classes of loans or borrowers.
‘With these measures, moneylenders will have greater flexibility to determine the interest charges based on market forces and their risk assessment,’ the Ministry of Law said.
To bring non-interest-related fees by licensed moneylenders in line with financial institutions, the bill proposes to give the Minister the discretion and power to prescribe the types and quantum of fees that may be charged.
There will be greater flexibility in the mode of disbursing and repaying of loans under the MLB. Licensed moneylenders can disburse loans by means other than a crossed cheque. Borrowers can also repay any amount of their loans via electronic funds transfer or in cash. These practices are restricted under the MLA.
While relaxing some controls, the government has no intention to loosen its regulation and enforcement. The MLB will give the Registrar more grounds for refusing to issue, revoking and suspending a licence, and by empowering the Registrar to impose and amend conditions of licence.
The bill will also require licensed moneylenders to maintain certain standards in their practices in addition to existing requirements. This includes only granting loans on application by a borrower in writing and informing a prospective borrower on the terms of the loan before granting the loan.
The Registrar will be given greater investigative powers. This allows it to inspect premises, documents and records without notice, and to make a copy of documents inspected, take photographs of the premises, seize any document, record, document or data storage equipment. It can also issue directions to moneylenders.
The consultation period will end on Sept 12. The public can send their feedback to the Registry of Moneylenders in electronic or hard copy.
Source : Business Times - 21 Aug 2008
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