What is the change? New restrictions on how foreign residents can borrow money have been announced by the Ministry of Manpower and Ministry of Justice.

What does the change mean? Foreign residents who borrow from unlicensed lenders will have their work pass revoked and be repatriated. Additionally, the Singapore government will impose new legal limits on the amounts that foreign residents may borrow from licensed lenders.

  • Implementation time frame: The restrictions on licensed borrowing for all foreign residents will be implemented in the fourth quarter of 2018. (The restrictions have been in effect since January 2018 for Singaporean citizens and permanent residents.) The penalties for unlicensed borrowing will be implemented in 2019.
  • Visas/permits affected: Work passes, long-term visit passes, short-term visit passes, dependant’s passes and student passes.
  • Business impact: Companies will be informed by the Ministry of Manpower if a foreign employee is found to have borrowed from an unlicensed lender and if the employee’s work pass has been revoked. Companies may submit an appeal, which will be considered on a case-by-case basis.
Borrower’s annual income Maximum loan amount for foreign residents Maximum loan amount for Singapore citizens and permanent residents
Less than S$10,000 S$3,000 S$1,500
At least S$10,000 but less than S$20,000 S$3,000 S$3,000
S$20,000 6X monthly income 6X monthly income

Analysis & Comments: Foreign residents and their employers should be aware of the harsh consequences for borrowing from unlicensed lenders and the new limits on borrowing from licensed lenders. The strict regulation is intended to protect borrowers from unlicensed lending and encourage borrowers to seek debt assistance.

Source: Deloitte LLP. Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 1 New Street Square, London EC4A 3HQ, United Kingdom.