But moneylenders believe the new measures - which include the extension of interest rate caps to those earning less than S$30,000 a year - will force them to turn away low-income borrowers who will then turn to loan sharks instead.
Yesterday, the amendments to the Moneylenders Act were passed and will take effect on June 1.
Several licensed moneylenders were understood to have expressed concern about the short notice given on the changes. And given their sunk costs, such as rent, they would find it costly to exit the industry in the face of the new measures.
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A licensed moneylender would also run afoul of the law if he referred a potential borrower to an unlicensed moneylender.
Under the changes, the Registry of Moneylenders can engage auxiliary police officers to assist in exercising its powers. All exceptions on the amount of unsecured loans that a borrower can obtain will also be removed.
Currently, borrowers can circumvent limits when they borrow, such as for business or renovation.
The new laws also mandate the use of an effective interest rate instead of a nominal interest rate for loans. The former takes into account the compounding effect of the frequency of the instalments over a one-year period, thus better reflecting the actual cost of borrowing over a one-year period.
An Advisory Committee on Moneylending Issues - chaired by Ms Sim - will also be set up. It comprises representatives from ministries, the industry and grassroots advisers and will provide "regular advice and feedback on moneylending issues".
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