The Monetary Authority of Singapore (MAS) has issued a prohibition on the offering of loan services by remittance licensees yesterday (10 Jun).
Remittance firms are expected to cease offering such services by 10 Sep this year.
The prohibition, however, will not apply to existing loans including restructured and refinancing loans, ST observed.
A MAS spokesperson told The Straits Times that the Authority “continues to monitor the lending activities of remittance licensees closely, and will not hesitate to take further actions where appropriate”.
The prohibition notice will precede the enforcement new Payment Services Act, under which licensees offering payment services such as remittance will not be permitted to lend money to individuals.
The Payment Services Act will replace the current Payment Systems (Oversight) Act and the Money-changing and Remittance Businesses Act.
MAS told ST in Oct last year that it was conducting a review on loans offered by remittance licensees after it was reported that Toast Me, a remittance licensee in Lucky Plaza, was offering domestic helpers cash advances with interest.
A contract seen by ST entailed a 10 per cent interest for a loan amount of S$700. Only S$630 was issued to the helper after a “first-time fee of $70” was deducted, ST observed.
Statistics have shown that there is an upward trend in foreign workers borrowing money from licensed moneylenders, from 7,500 for the whole of 2016 to 35,000 in the first half of 2018.
However, the Government’s decision to impose new loan caps in a bid to make moneylending processes more stringent has resulted in certain foreigners resorting to unlicensed moneylenders, ST reported.