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In Singapore, the distinctions between money lenders and loan sharks are quite specific due to the country's stringent financial regulations. Here’s a detailed look at how these terms apply in Singapore:
Licensed Money Lenders
Legality: Licensed money lenders in Singapore operate legally and are regulated by the Registry of Moneylenders, which is part of the Ministry of Law.
Regulation: They must adhere to the Moneylenders Act and its regulations. This includes obtaining a license from the Registry of Moneylenders and following strict guidelines regarding loan practices.
Interest Rates: They are required to follow prescribed interest rate caps. For example, as of 2024, the maximum allowable interest rate for loans from licensed money lenders is 4% per month.
Practices: Licensed money lenders are required to provide transparent loan terms, including clear disclosure of the total cost of the loan, and must follow fair practices in lending and debt collection. They are also required to conduct proper due diligence and provide written loan agreements.
Loan Sharks
Legality: Loan sharks are illegal in Singapore. They operate outside the bounds of the law and are not licensed or regulated.
Regulation: There is no oversight of their activities, which often leads to exploitative and illegal practices.
Interest Rates: Loan sharks typically charge exorbitant and unregulated interest rates, often resulting in extremely high costs for borrowers.
Practices: They are known for using aggressive and illegal methods to collect debts, including harassment, threats, and violence. Loan sharks often target vulnerable individuals who might have difficulty obtaining loans through legal channels.
Government Action: The Singaporean government takes a strong stance against loan sharks, with law enforcement agencies actively pursuing and prosecuting illegal lenders. There are also public awareness campaigns to educate people about the dangers of borrowing from loan sharks and to encourage them to seek help if they are targeted.
In summary, in Singapore, licensed money lenders are regulated and operate within legal frameworks, while loan sharks are illegal and engage in predatory practices.
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