Individuals and businesses sometimes need cash at short notice for a limited period of time, they cannot approach banks for these requirements and money lenders enter into foray in these situations. Money lending is as the name suggests giving cash loans at a higher rate of interest for a short period time. Money lenders are the companies or individuals whose main business is to lend money.
In order to be a Money Lender Singapore, you have to register a sole proprietorship or partnership or a company with the main activity as money lending with the Registry of Moneylenders. The individual who is managing the business is also required to pass the moneylenders test on the Moneylenders act and Rules, conducted by the Registry of Money lenders. Any unlicensed money lending is considered as a criminal activity and carries a penalty ranging from $50,000 to $500000. And if an individual carries on money lending he will face fines ranging from $30000 to $300000, along with jail term and caning.
Money lenders provide less than 1%of total consumer loans in Singapore. The moneylenders act (2008) and the moneylenders’ rules (2009) along with subsequent addendums regulate Singapore’s money lending industry. These regulations balance both the rights of the borrowers as well as the lenders. The regulations place a cap on the rate on interest levied, late payment penalties and other fees. This act also prohibits lenders to behave in threatening way or harassing customers. There are several penalties and punishments for sidestepping the regulations like fines, imprisonment and also caning.
But the strict regulations and punishments, while restricting the scope of licensed money lenders have also given space for illegal and fraudulent lenders to crop up. They offer loans to the borrowers with risky credit history who are turned away by banks and authorized money lenders.
The Singapore government is very proactive and is trying to maintain a balance between consumer protection and regulation of money lenders.
A credit Bureau for money lenders in Singapore came into operation from 2016. The Money Lenders Credit Bureau (MLCB) will enable licensed money lenders to assess the credit worthiness of the borrowers. All the licensed moneylenders have to submit information of their loans and repayment records of their borrowers to the bureau. This report can be accessed by both the borrowers and money lenders. This report will help the moneylenders to have the entire credit history of the borrower before sanctioning loans, thereby reducing the default rates and also helps them to keep a track of the borrowing activities of their customers.
For more detailed information about the money lending scenario in Singapore visit Easycredit.com.sg