How Do The New Rules For Licensed Money Lenders Protect Borrowers?

In times of financial distress, moneylending can be a lifesaver that allows you to borrow cash quickly. 

However, despite its numerous benefits, there’s always a likelihood that one may fall prey to illegal money lenders or loan sharks.

The Moneylenders Act outlines rules and regulations on operations, allowed fees, interest rates, and processes that licensed money lenders are expected to follow. 

This guide will look at how licensed money lender new rules protect borrowers. Read on to find out what they are. 

What Is The Moneylenders Act?

The Moneylenders Act is a set of rules imposed by the Singapore government to protect borrowers from unfair and exploitative lending practices. 

Under the Act, no individual or business can carry any moneylending business or practice without a valid license. 

A moneylending license is required for every branch carrying out credit services – meaning every branch must have its license. 

Besides, each money lender must do its due diligence to ensure every borrower is financially capable of repaying the loan before extending credit. 

The Registry of Moneylenders enforces the Act and licenses all individuals and businesses looking to establish themselves as lending institutions in Singapore. 

Think of the Registry as a crucial watchdog organisation that protects borrowers and lenders from unfair moneylending practices.

It aims to ensure all licensed money lenders operate within the law, especially regarding borrowers’ rights. 

Penalties and punishments are imposed on money lenders that violate the rules set under the Act, including fines, revocation, or refusal of their licenses. Let’s look at these rules. 

What Are The Moneylenders Rules?

The Singapore government has always been at the forefront of protecting borrowers and money lenders. 

The protection and rights of these individuals and groups are summarised in the Moneylenders Act. The document outlines the operations of the moneylending business. 

Also, it describes the rules and regulations on how money lenders must use, collect, and disclose the information and data of borrowers. 

To prevent unscrupulous moneylending practices, both borrowers and money lenders in Singapore must know the rules and regulations outlined in the Act. 

Money Lenders Must be Licensed

There are hundreds of both legal and illegal money lenders in Singapore. 

Therefore, borrowers must be aware of the companies to trust. To ascertain a legitimate or licensed money lender in Singapore, check the list of licensed money lenders registered in Singapore published by the Ministry of Law (MinLaw). 

This list is updated monthly – you can always check the recent list at the MinLaw website. The Registry of Moneylenders in Singapore provides you with a list of the licensed money lenders that you can trust. 

This list is easily accessible online. 

How Much You Can Borrow?

The amount you can borrow from a licensed money lender in Singapore depends on several factors. 

For secured loans, you can get any amount you need as long as you qualify. On the other hand, unsecured loans can fall under different categories. 

Singaporeans and permanent residents with an annual income of $20,000 and below can only borrow an amount of up to $3,000 from all money lenders combined. 

Those Singaporeans and permanent residents who earn over $20,000 annually can borrow up to six times their monthly income. 

For foreigners, those earning below $10,000 annually can only borrow $500, while those earning between $10,000 and $20,000 can borrow up to $3,000. 

Foreigners with an annual income over $20,000 can borrow up to six times their monthly salary. 

Interest And Other Charges

According to the Act, the maximum money lender interest rate is 4% monthly. This cap applies to all borrowers despite the loan type or income. Other fees include:

  • A maximum fee of $60 for every month of late repayment
  • Loan fee of no more than 10% of the principal loan amount
  • Legal costs set by the court in the event of a successful claim for the recovery of the loan

You can check MinLaw’s guide for a detailed breakdown of interest rates and other charges.

Advertisement Regulations

With the hundreds of illegal money lenders in Singapore, there’s always the likelihood that you may receive advertisements sent via unorthodox advertising methods such as unsolicited texts, messages, calls, and emails. 

Licensed money lenders are only allowed to advertise through print or online business directories, their own websites, and their physical office or place of business.


Once a licensed money lender in Singapore has granted you a loan, always ask for a copy of the signed agreement. 

Also, ask for receipts every time you make any repayment towards the loan. These receipts should be correct and prove that you’re repaying the loan. 

You should also request a statement account of the entire loan at least once every January and July to give you a clear idea of how much you still owe. 

What The New Moneylending Regulations Are About 

From 30 Nov 2018, MinLaw implemented the first phase of the Moneylenders Act and Moneylenders Rules. 

This was done to offer better protection for Singaporean borrowers and bolster the regulations of licensed money lenders. 

The second phase of the implementation to professionalise the moneylending sector took effect in the first quarter of 2019.

Together, these new rules and improvements to the sector will help ensure that borrowers can safely access personal credit. 

These new rules introduce aggregate loan caps to limit the amount you can borrow from all combined licensed money lenders. 

These caps will apply to all citizens, permanent residents and foreigners in Singapore. These caps include:

Borrower's Annual IncomeSingapore Citizens And Permanent ResidentsForeigners Residing In Singapore
Less than $10,000$3,000$500
At least $10,000 and less than $20,000$3,000$3,000
At least $20,0006x monthly income6x monthly income

How They Protect Borrowers 

The new rules and regulations set by the Ministry provide a self-exclusion system. 

This helps borrowers regulate their borrowing habits and participate in debt assistance programmes that usually require self-exclusion. 

Under this framework, authorised money lenders are not allowed to lend to anyone who has applied for self-exclusion.

These laws also prohibit unlicensed money lenders with predatory lending practices from operating in the market. 

This protects the borrowers from unlicensed money lenders or loan sharks that prey on unsuspecting or desperate borrowers. 

Licensed money lenders must have a license provided by the Registry of Moneylenders in Singapore.

The Act also requires the Moneylenders Credit Bureau (MLCB) to protect borrower data and the security, integrity, and confidentiality of its credit reports. 

Licensed money lenders must also provide loan contracts that clearly state the interest rate, principal, or any allowed fees payable. 

This way, borrowers will understand the contract they’re getting into and avoid unnecessary problems in the future. 

Strengthened Regulations For Licensed Money Lenders 

The authorities have also implemented a regulatory framework for the MLCB, where licensed money lenders must get a borrower’s credit report from the bureau. 

The MLCB is a central repository of data on borrowers’ loans and repayment loans before any loan is granted. 

Besides, money lenders must submit precise borrower information to the bureau and offer timely updates when borrowers repay their loans. 

Obligations will also be put on the framework, as well as licensed money lenders, to ensure the security, integrity, and confidentiality of borrower information. 

It also offers a self-exclusion framework to assist borrowers in regulating their borrowing habits and taking part in debt assistance programmes that usually require self-exclusion.

Licensed money lenders cannot lend to anyone who has applied for self-exclusion. To deter undesirable lenders from the industry, the law requires the Registry to approve all money lenders before they are allowed to operate in the moneylending business. 

These improvements in the moneylending sector will ensure that borrowers can safely access personal credit. 

Additional Measures To Professionalise The Moneylending Industry 

Along with these licensed money lender new rules, the Ministry of Law has enacted comprehensive measures for moneylending activities geared towards foreigners with work passes or permits. 

This includes the restrictions on the disbursement of loans by licensed money lenders to foreigners, licensed money lenders’ lending and advertisement strategies, and a reduction of the aggregate loan cap for low-income foreigners.

Help avenues are also available for existing borrowers. 

These measures are supported by education and outreach efforts by the police, the Ministry of Manpower, and enforcement efforts against unregulated money lenders. 

These measures address the increasing number of foreigners borrowing from licensed money lenders, which has risen significantly over the past few years and remained high. 

In addition, the self-exclusion system will also be put in place.  

Although these measures need time to be effective, the number of foreign borrowers has remained high. 

Some licensed money lenders also target work permit holders via shopfront advertisements and readily give loans to foreign borrowers. 

Work permit holders also act as guarantors for one other to obtain these loans. As a result, MinLaw is tightening the restrictions on licensed money lenders extending loans to foreigners. 

Need a loan but don’t know how to go about it? 

At Horison Credit, we’re your number-one moneylending service, giving you the best loan terms and rates. 

With vast experience in the industry, we are licensed and comply with all the new rules for licensed money lenders to protect our clients. 

Contact us today for a quick financial fix or apply for a loan now.


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