Towards the end of 2018, six firms in Singapore were awarded the honour of running new business models under the moneylending pilot programme.
These six companies were specially selected as they have met a set of stringent mandatory criteria. These include the soundness and completeness of their business model, participation in debt assistance schemes, professional debt recovery practices, customer and communication strategies and effective cost of credit and credit policies.
They also have a paid-up capital of at least S$1 million, proving their financial capability and have demonstrated a track record in providing consumer credit.
Under this pilot scheme, borrowers would be rewarded for making early repayments on their loans. This would then incentivise them and reduce the risk of loan defaulting.
This new moneylending pilot programme model comprises more extensive use of data to evaluate borrowers’ creditworthiness, through digitalised processes, hence lowering the cost.
All of this is part of an effort to better protect borrowers’ through business led improvements, and rewarding borrowers with good repayment habits, said the Ministry Of Law in a media release.
Out of the six firms, Credit 21 Pte Ltd and two other firms can apply to operate four outlets each.
Lending Bee Pte Ltd, a subsidiary company of Credit 21 Pte Ltd, is one of the licensed moneylenders chosen for the pilot scheme. Till date, Lending Bee has four outlets across Singapore – Orchard, Toa Payoh, Bedok, Jurong East.
“We see ourselves as the new pioneers in the moneylending landscape. By digitalising our lending processes, we also help to minimize the cost of borrowing for our borrowers. Through this new moneylender pilot programme, we hope to destigmatise the notion of licensed moneylenders being a borrowers’ last hope,” said Hazel, the branch manager of Lending Bee’s Orchard outlet.
“Lending Bee is also pleased to have designed a mobile application where borrowers’ can have 24/7 access to their account so that they will be able to make timely repayments and check on their loan status. This way, we will also be able to reward those who have made early repayments”.
In 2012, a moratorium was imposed to curb the licenses given towards moneylenders. Since then, the number of licensed moneylenders in Singapore has fallen from 215 to 162 outlets.
With this new moneylender pilot scheme in place, “The six firms will be allowed to apply for licences for up to 15 new outlets in total and this represents less than 10% of the 162 outlets currently operated by the 157 licensed moneylenders,” said the Ministry of Law in a media release.
The licensees will be allowed to operate for up to two years, starting from 2019. Following which, the Law Ministry will assess the results of the pilot and explore options to improve the moneylending regulatory regime.