Q374: To ask the Senior Minister (a) what is the number of personal loans and credit facilities in the market that have a minimum annual income requirement of between $18,000 and $30,000, such as ezyCash; (b) how many of these personal loans and credit facilities are governed by the Banking Act; and (c) in the last two years, how many cases of bankruptcy have resulted from borrowers of such facilities being unable to pay their loans.
Mr Tharman Shanmugaratnam, Minister for Education and Deputy Chairman:
1. Financial institutions regulated by MAS can only grant unsecured credit facilities to individuals earning a minimum annual income of $30,000. However, apart from these regulated financial institutions, moneylenders also grant loans. They are either licensed or granted exemptions under the Moneylenders Act. While moneylenders are not required by law or regulation to grant loans only to borrowers who have a certain minimum income, they will assess a borrower's credit-worthiness before deciding whether to grant a loan and what the loan amount should be. Some of these moneylenders only lend to borrowers with a certain minimum income. For example, GE Money which provides the ezyCash facility that Dr Ong Soh Khim refers to requires its borrowers to have a minimum income of $19,200 per annum.
2. Dr Ong has also asked about the number of personal loans and credit facilities in the market that have a minimum annual income requirement of between $18,000 and $30,000. The Government does not have data on the income limits that each moneylender subjects its borrowers to.
3. Moneylenders are not required by law to impose minimum income requirements, unlike financial institutions regulated by MAS. The Government places the focus of the rules on financial institutions as these are the largest lenders unlike moneylenders which are generally small operations granting small value loans. Nonetheless, with the emergence of larger moneylenders like GE Money, the Government is looking into establishing a consistent regulatory regime for personal loans granted by financial institutions and moneylenders.
4. Dr Ong also asked about the number of bankruptcy cases. In the last two years, about 2000 to 3000 persons across all income groups were adjudged to be bankrupts each year for reasons to do with excessive use of credit.