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Moneylenders in Singapore to face more stringent rules: Shanmugam
AN interest of not more than four per cent per month, and a late fee of not more than S$60 per month were among the many recommendations unveiled on Friday by the Advisory Committee on moneylending.
Announced last June by the Ministry of Law, the committee was set up to review and strengthen the moneylending regulatory regime in Singapore.
Of the 15 recommendations introduced, 12 have been accepted by the government, said Minister for Law K Shanmugam at a media briefing on Friday.
He added that the recommendations seek to strike a balance between protecting borrowers and allowing the moneylending industry to remain commercially viable.
Among the accepted recommendations are that:
- Moneylenders can administer an upfront administration fee of not more than 10 per cent of the loan principal;
- Moneylenders can impose a maximum of four per cent nominal interest rate and a maximum of four per cent late interest rate per month;
- Late fees should be capped at S$60 per month;
- Additional fees (such as fees for dishonoured cheques or unsuccessful GIRO deductions) will not be allowed to be charged to the borrowers; and
- Total borrowing costs (which comprise administrative fees, interest payments and late fees) will be capped at 100 per cent of the loan principal.
The remaining three recommendations that the Ministry of Law said it would review in time include lifting the moratorium on the granting of new licenses, regulating debt collection behaviour and advertisements by moneylenders.