Growth of moneylenders raises concern that low-income earners are being lured into spiralling debts

Since moneylending laws were relaxed in 2008, many more licensed money lenders have sprouted up. The growth of moneylenders raises concern that low-income earners are being lured into spiralling debts as they do not qualify for a bank loan.

Despite the high interest rate and upfront fees, these borrowers say they have no other choice.

The Sunday Times visited a total of 10 different moneylenders located in Ang Mo Kio, Jalan Besar and Guillemard Road, and found that the environment they operated in often facilitated easy credit borrowing.

The offices, simply furnished, were often located in the heartland.

All a borrower has to do to take a loan is to walk in, fill up a form and hand it over at a counter, typically manned by a pretty, young woman waiting to process the loan application.

Documents that moneylenders require are proof of income - either through a pay slip or a company employment letter - and the applicant's identity card.

A customer's SingPass user ID and password are usually also required, even though the Registry of Moneylenders now prohibits this.

After submitting the documents, the borrower is invited to have a seat at the waiting area while the staff checks his records. Water dispensers and comfortable seats help calm frazzled nerves.

To reassure borrowers that the lenders they are approaching are legitimate, the company's moneylender licence is always prominently displayed.

To keep borrowing discreet, most shopfronts of the moneylenders are lined with frosted stick-on wallpaper, with only a little slit - slightly above waist level - for staff to monitor the situation outside the office.

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For the first time, a licensed moneylender has been charged last for allegedly breaking the law last Monday.

George Phua, founder of Capital Alliance Credit, had allegedly loaned money without proper documentation, lent excessively to low-income earners and failed to inform borrowers in writing about the terms of their loans.

He faces about 90 charges but the prosecution will proceed with only 30 of them while taking the remaining into consideration.

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