Due Diligence and Credit Checks for Foreign Domestic Workers Taking Loans from Moneylenders
Ministry of LawSpeakers
Summary
This question concerns the due diligence and credit checks for foreign domestic workers taking loans, as raised by Ms Nadia Ahmad Samdin. Minister for Law K Shanmugam stated that licensed moneylenders must verify income documents and obtain Moneylenders Credit Bureau (MLCB) reports to assess creditworthiness. To safeguard foreigners earning less than $10,000 annually, the MLCB system automatically rejects loan applications that exceed the aggregate cap of $500. Minister for Law K Shanmugam highlighted that these reports provide up-to-date indebtedness data to ensure responsible lending and prevent individuals from borrowing beyond their means. Additionally, the Registry of Moneylenders conducts regular inspections to ensure licensed moneylenders comply with all regulatory requirements.
Transcript
24 Ms Nadia Ahmad Samdin asked the Minister for Law with regard to foreign domestic workers who seek to take loans from moneylenders in Singapore (a) whether there are any due diligence and credit checks currently in place and, if so, what are they; and (b) whether there are safeguards being implemented to ensure that foreigners earning less than $10,000 per annum do not exceed the aggregate loan cap of $500 and, if so, what are they.
Mr K Shanmugam: Licensed moneylenders are required by law to conduct due diligence and credit checks. This applies to all individuals who apply for a loan from licensed moneylenders, regardless of whether they are Singaporeans, PRs or foreigners.
Before granting a loan to an individual, a licensed moneylender must obtain the loan applicant's personal details and income information from the applicant. The licensed moneylender must also verify the information obtained using genuine and contemporaneous documents, for example, identification documents, CPF contribution statements, payslips and so on.
In addition, the licensed moneylender must obtain a credit report of the loan applicant from the Moneylenders Credit Bureau (MLCB) to conduct a creditworthiness assessment before deciding if a loan should be granted.
The MLCB is a central data repository that contains records of borrowers' loans and repayment with licensed moneylenders. It provides up-to-date details of a borrower's creditworthiness and indebtedness through its credit reports. This enables licensed moneylenders to make informed and responsible lending decisions, and helps borrowers avoid borrowing beyond their means.
To ensure that borrowers, including foreign borrowers, do not exceed the applicable aggregate loan cap, such as the $500 cap for foreigners earning less than $10,000 per annum, the credit report from the MLCB will indicate the maximum unsecured loan amount an individual can borrow (based on his/her income level) from all licensed moneylenders combined. If the individual already has outstanding loans with licensed moneylenders, the credit report will indicate the maximum unsecured balance he/she can borrow. In addition, the MLCB system will automatically reject the submission of a loan application if the amount exceeds the maximum unsecured balance.
The Registry of Moneylenders also conducts regular inspections on licensed moneylenders to ensure they comply with moneylending laws.