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The Money Lending Act in Singapore and How Do Lenders Comply with It  


If you are short of money and need fast cash to meet a personal or business emergency, you could approach a private money lender.

Unlike unlicensed loan sharks, these lenders are covered by the Singapore Moneylenders Act. The Act requires private lenders to have a license to offer financial services to the general public.

Therefore, a licensed money lender Singapore must follow the necessary compliance and rules outlined in the Act. Violation of the same could land the lender in legal trouble. Statistics show that the number of licensed money lenders in Singapore came down by around 10% since 2010 due to stricter legal regulations.

So it is vital to ensure the moneylender you choose has the required licenses and that the names of such lenders appear in the registry of moneylenders maintained by the Ministry of Law.

What is the Singapore Moneylenders Act?

The government formulated the Act specifically with the interest of borrowers in mind. The Singapore Moneylenders Act protects the rights of the borrowers who approach private money lenders for financial services.

Specific instructions about how private money lenders should function and operate are detailed in the Act. It also contains information about the compliances, disclosures, and reports a money lender must make and submit to the government periodically.

Moneylenders in Singapore must read and understand the document. The primary intent of the Act is to protect resident borrowers from illegal and unscrupulous loan sharks. Borrowers should first check the licenses and other relevant documents of the lenders before applying for the loan.

The Singapore Ministry of Law governs licensed money lenders. These lenders also have their names in the Registry of Moneylenders maintained by the Ministry. You may also consider other factors like your borrowing limit and your specific requirements.

Compliances Lenders Are Required to Follow 

From advertising to interest rates, Singaporean money lenders have to comply with the procedural requirements set out in the Act for all aspects of functioning. Lenders should also ensure their accounts are audited correctly and that they file returns on time.

Customer due diligence measures and other policies listed in the Act help minimise risks associated with money laundering and financial terrorism in the country. You may note that the Act covers all moneylenders “incorporated” in Singapore, their branches, subsidiaries, and franchises.

Interest Rate Limits

A licensed money lender in Singapore cannot charge more than 4% as interest on personal or business loans. Borrowers have the right to sue the moneylender if they charge higher interest rates.

Moneylenders are also required to clearly state the interest rate and other fees associated with loans on the loan agreement given to customers. If the borrowers default loan payments, the lenders can charge a maximum of SGD 60 per month as the penalty for such default. Moneylenders may also charge a maximum of 10% of the principal amount when granting the loan.

Loan Recovery Measures

Private Singapore money lenders cannot employ aggressive techniques or any form of harassment to recover loans from borrowers.

If a Singapore borrower does not repay the loan on time, lenders have the right to seize the borrower’s property and belongings with the Ministry’s permission. However, the lender should give the borrower sufficient warning and time before seizing the property.


Advertisement and promotional options available to a licensed money lender in Singapore are limited. Singapore money lenders can only advertise through:

  • Print media or online directories
  • The business website
  • The moneylender’s physical office space or other physical location owned by them

These non-banking financial institutions cannot advertise false terms, scams, or any misleading information. Potential borrowers can raise a complaint with the Ministry if they suspect the lender is putting out misleading information or even if they receive digital advertisements through texts, phone calls, or emails from money lenders.

Due Diligence and Reporting

Licensed money lenders must follow due diligence procedures, financial reporting requirements, and filings mentioned in the Act. The lenders should notify the Ministry of any significant changes they make in their functioning. Detailed disclosure requirements in the Act should be studied and followed.

Record-Keeping Requirements

The lenders should maintain detailed reports relating to all loans that lenders grant borrowers. They must make these reports available to the Ministry or other authority for audit purposes.

The registrar, law enforcement authorities, and internal and external auditors can demand such information from the lender.

You may note that the Act also covers the rights of the money lenders. Strict and correct compliance with the Moneylenders Act will help ensure that the lenders don’t lose their licenses. It will also make the lending and borrowing process easier and smoother for the lender and the borrower.



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