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New moneylending rules to kick in on Thursday in Singapore
NEW controls on borrowing from licensed moneylenders will come into effect on Thursday, Singapore's Ministry of Law said on Wednesday.
From Oct 1, 2015, loans from moneylenders will be subject to the following caps: an upfront administrative fee of not more than 10 per cent of the loan principal; interest of not more than 4 per cent per month; late interest of not more than 4 per cent per month; late fee of not more than S$60 per month; and total borrowing cost of not more than 100 per cent of the loan principal.
These caps will not apply to loans granted to businesses which have been registered for at least two years before the grant of the loan.
These new controls follow recommendations made in May by a 15-member advisory committee on moneylending.
"The controls on borrowing costs will offer borrowers more protection by ensuring that they are not subject to exorbitant interest rates and fees, while preserving their access to credit by allowing the industry to remain commercially viable," said Manu Bhaskaran, chairman of the committee, in a press statement.