Singapore – According to the Ministry of Law, low income foreigners can take a loan of only $500 from licensed moneylenders. And the Ministry of Law announced this on Monday and informed about the restricted amount they can borrow.
Now, foreigners who earn less than $10,000 annually can borrow up to $1500 from all licensed moneylenders. But from Tuesday the loan cap lowers to just $500. And due to this, people are now looking for alternate sources to borrow money, like Finansis, where the money can be borrowed at cheap interest rates.
Min Law informed in a media release- “With the existing cap on borrowing cost at 100% of the loan principal. This ensures that the maximum repayable amount (loan principal and all permitted interest and fees) is kept to a more manageable $1000 at any point.”
There is also another change with this rule. From now on money lenders can no longer accept foreigners as guarantors. Display advertisement is also not allowed. Min Law said that “Domestic helpers are welcome. This reduces the visibility of easy credit to vulnerable work pass holders.”
Manpower ministry is strict. And with the power vested in it, it punishes any work pass holder who breaks or facilitates for gains. Offenders are in grave danger, because the work passes gets revoked if found guilty.
The rule comes to play from August 15. And moneylenders won’t lend more than 300 foreign borrowers or extend more than $150,000 in total principal loans to foreigners at any point in time. They also can’t grant loans to more than 15 foreign borrowers in a month and also more than 50 foreign borrowers in a year. If their loan books have an excess of these caps, then their right to loan to foreigners shall be revoked.
Centre made a statement on the recent changes- “CDE believes that the new measures announced today will further help control such borrowing situation. To equips FDWs with financial literacy knowledge, CDE will continue to educate our FDWs on effective money management.”