Regulation of Licensed Money Lenders' Loan Repayment Terms for Low-income Borrowers

Debated in Parliament on 7 May 2024.

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Henry Kwek proposed amending laws to let low-income borrowers repay partially on unsecured loans under $15,000 to ease repayment and cut interest and fees.
Minister Shanmugam explained the regulatory goal is to balance credit access with borrower protection, noting moneylenders already negotiate repayments and mandates could raise costs and restrict credit.
The Ministry encourages moneylenders to restructure loans or refer borrowers to social agencies for help, with queries directed to the Registry of Moneylenders.

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Kwek Hian Chuan Henry

Mr Kwek Hian Chuan Henry asked the Minister for Law whether the Ministry will consider amending legislation and mandate licensed moneylenders to allow borrowers from low-income backgrounds and who have borrowed unsecured loans of less than $15,000 opt for partial repayment at any point during the loan duration, so as to facilitate repayment and avoid recurring interest and late payment fees.

K Shanmugam

The aim of our regulatory regime for licensed moneylenders is to maintain a balance between allowing individual borrowers reasonable access to credit while ensuring that borrowers, particularly lower-income borrowers, are adequately protected. Licensed moneylenders bear the risks of lending and are incentivised in a competitive market to negotiate restructuring of repayments, taking into account the borrower's risk profile.

Borrowers and licensed moneylenders are able to restructure loan repayments, subject to mutual agreement. This can include earlier repayment of loan instalments to reduce the interest incurred, or extension of the loan tenure to reduce each remaining loan instalment and avoid late payment fees. Legislating to mandate specific arrangements is generally inadvisable. For example, mandating to allow early repayment of loans may benefit some borrowers, but may also result in moneylenders pricing in the early repayment risk. Mandating extension of the loan tenure may also result in moneylenders pricing in this risk and potentially constrict access to credit to borrowers with higher-risk profiles.

The Ministry has instead encouraged licensed moneylenders to, as set out in the Professional Service Handbook for Licensed Moneylenders, assist borrowers with financial difficulties by: (a) restructuring the loan repayment to suit the borrower's financial situation; or (b) referring the borrower to a Social Service Agency for assistance in restructuring the loan repayment or for consideration to be placed on a debt consolidation scheme.

Borrowers who have queries on options available to them may also approach the Registry of Moneylenders.

Summary written by AI (learn more)

Henry Kwek proposed amending laws to let low-income borrowers repay partially on unsecured loans under $15,000 to ease repayment and cut interest and fees.
Minister Shanmugam explained the regulatory goal is to balance credit access with borrower protection, noting moneylenders already negotiate repayments and mandates could raise costs and restrict credit.
The Ministry encourages moneylenders to restructure loans or refer borrowers to social agencies for help, with queries directed to the Registry of Moneylenders.

Questions identified by AI (learn more)

Regulation of Licensed Money Lenders' Loan Repayment Terms for Low-income Borrowers | PAPERCUTS

Regulation of Licensed Money Lenders' Loan Repayment Terms for Low-income Borrowers

Debated in Parliament on 7 May 2024.

Summary written by AI (learn more)

Henry Kwek proposed amending laws to let low-income borrowers repay partially on unsecured loans under $15,000 to ease repayment and cut interest and fees.
Minister Shanmugam explained the regulatory goal is to balance credit access with borrower protection, noting moneylenders already negotiate repayments and mandates could raise costs and restrict credit.
The Ministry encourages moneylenders to restructure loans or refer borrowers to social agencies for help, with queries directed to the Registry of Moneylenders.

Questions identified by AI (learn more)

Full Transcript

Kwek Hian Chuan Henry

K Shanmugam

Borrowers who have queries on options available to them may also approach the Registry of Moneylenders.

Summary written by AI (learn more)

Henry Kwek proposed amending laws to let low-income borrowers repay partially on unsecured loans under $15,000 to ease repayment and cut interest and fees.
Minister Shanmugam explained the regulatory goal is to balance credit access with borrower protection, noting moneylenders already negotiate repayments and mandates could raise costs and restrict credit.
The Ministry encourages moneylenders to restructure loans or refer borrowers to social agencies for help, with queries directed to the Registry of Moneylenders.

Questions identified by AI (learn more)

Regulation of Licensed Money Lenders' Loan Repayment Terms for Low-income Borrowers

Summary

Questions Identified

Full Transcript

Kwek Hian Chuan Henry

K Shanmugam

Summary

Questions Identified

Regulation of Licensed Money Lenders' Loan Repayment Terms for Low-income Borrowers

Summary

Questions Identified

Full Transcript

Kwek Hian Chuan Henry

K Shanmugam

Summary

Questions Identified