The much talked about Moneylenders Credit Bureau will need all licensed moneylenders to provide information on their loans and the borrowers repayment details. This was announced after the 4% interest rate cap.
Individuals used to be able to take up multiple loans from different moneylenders, without proper checks conducted on their repayment ability. Most of the time, it depends on the loan officer assessment of the borrower. Now, with the implementation of the Moneylenders Credit Bureau, licensed moneylenders will get the latest information of the borrower’s credit risk and their debt servicing ratio. This allows a better assessment of the borrower’s loan situation and ensure that borrowers do not borrow beyond their repayment ability.
We do understand the government standing on this as it primarily educates the borrowers on a larger scale. We have rejected borrowers before just by assessing their current withstanding loans. We also support this movement as this provides a safety net for businesses like us in the moneylending industry as this will prevent a percentage of borrowers who could not repay their debts from over borrowing. Financial institutions and licensed moneylenders would not want to overwrite bad debts as it leads to high overheads.
Moneylenders Credit Bureau in Singapore
The main goal of the Moneylenders Credit Bureau is to protect borrowers. This was due to many complaints from the public on errant companies making borrowers lending money beyond their means. Errant companies also charge overly high interest rates leading to borrowers being unable to repay.
Licensed moneylenders benefit from this new Act, as they can now tap onto the information by the Moneylenders Credit Bureau to affirm their loan assessment.
This will curb excessive borrowing and “help debtors to keep their loan commitments at a more manageable level”, DP Info said.
“We’ll be able to know how much a borrower has borrowed from other moneylenders, so that we won’t over-extend the loan,” said Mr Peter Tan, vice-president of the Moneylender’s Association of Singapore.
Said Lincoln Teo, chief operating officer of DP Info: “The information provided will help promote responsible borrowing. The transparency also means that individuals, when seeking to buy a credit product from a moneylender, will be more likely to take their personal and financial circumstances into account when making their decision. This initiative will eventually see a reduction in the number of defaults. The introduction of the Moneylenders Credit Bureau brings us even closer to a holistic assessment of a borrower’s credit worthiness and repayment abilities.”
“Coupled with our other bureaux and through DP Info’s sophisticated technology, we hope to provide the licensed moneylending community with more data and information to make better decisions. The information will help promote responsible borrowing.”
“This initiative will eventually see a reduction in the number of defaults.”
DP Info currently operates two other credit bureaus – the DP Credit Bureau and the DP SME Commercial Credit Bureau. Read more on DP Info announcement on the new ruling of the Moneylenders Credit Bureau.
Licensed Moneylending News
27 Nov 2015: With the Credit Bureau, has now benefited welfare organisations.Two voluntary welfare organisations (VWOs)- Blessed Grace Social Services and Adullam Life Counselling – can now, with a borrower’s consent, refer to a credit bureau to get a clearer picture of his/her credit records. This is from a new memorandum of understanding signed between VWOs and the Moneylender’s Association of Singapore (MLAS) and DP Information Network.
These VWOs, work as mediators between debtors and licensed moneylenders as they work out structured repayment programmes agreeable to affected parties.
The DP SME Commercial Credit Bureau contains over 15million payment records of Singaporeans and Singapore businesses. This information can be accessed by the VWOs, and the information is gathered monthly from bureau members.
MLAS president Peter Tan said: “We hope that by working together with the VWOs, most debtors will be able to settle their debts in a restructured repayment scheme.”