SINGAPORE – Licensed moneylenders in Singapore are given an opportunity to access and review potential borrowers’ repayment and loan records, beginning March 1. This is made possible by the new MLCB or Money Lenders Credit Bureau.
Thus, it is made easier for Singapore moneylenders to determine borrowers’ credit history and records, which will prevent the latter from borrowing a massive amount of money that may only be left unpaid. The Ministry of Law made an announcement regarding this MLCB last February 24, 2016. Since it has been an issue that borrowers’ often find themselves in enormous debt, they are left struggling with the repayment of their loans.
What licensed moneylenders are required to do is to update loan information on borrowers regularly. These updates are submitted to the bureau, as this is necessary in generating credit reports and records on every borrower. Licensed moneylenders and borrowers may be able to purchase these reports, which are priced at $0.50 and $1, respectively.
According to Ministry of Law, there are several benefits offered by the MLCB. For instance, these credit reports can be used by borrowers in monitoring their loans. Hence, they can manage their finances efficiently and prevent borrowing more than they can repay. Meanwhile, licensed moneylenders are able to further assess potential borrowers’ capability to repay their loans by checking initially the credit report. Upon reviewing loan records, moneylenders can make a better decision of either granting or denying each loan application submitted to them.
As a result, licensed moneylenders minimize risks of having borrowers defaulting on their loans. This is a major concern among all moneylenders since non-repayment of loans is detrimental to their business. In addition, these credit reports obtained by moneylenders may be used in checking for borrowers who have existing loan contracts. The same report also reveals information on borrowers with new loans filed to other moneylenders.
It was in March 2014 when the concept of issuing a credit bureau in support for licensed moneylenders and borrowers first came into existence. The DP Information Group, a credit reference agency, was assigned by the ministry in November of last year to develop and manage operations of the MLCB. The Ministry of Law considered it as a means of securing moneylenders from high default rates while assisting borrowers in improving their credit through timely loan repayments.
Peter Tan, the president of Moneylender’s Association of Singapore, stated that the new MLCB gives moneylenders a more accurate means of conducting credit assessments. Since the nature of this moneylending business is rather high-risk, it is only important to determine borrowers’ credit worthiness before giving them access to loans.