MONEYLENDERS BILL

Order for Second Reading read.

7.02 p.m.

The Minister for Labour and Law (Mr K. M. Byrne): Mr Speaker, Sir, I have His Excellency the Yang di-Pertuan Negara's recommendation in regard to this Bill.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The purpose of this Bill is, as stated in its long title, "to make provision for the regulation of moneylending".

The Explanatory Statement to the Bill deals with its provisions in detail and I need only refer to some of the salient features of the Bill.

Mr Speaker, Sir, under the Bill, moneylenders will be required to take out licences annually from the Registrar of Moneylenders. A loan by an unlicensed moneylender will be unenforceable. To qualify for a licence, the moneylender must satisfy the Registrar that he is resident in Singapore, is of good character, is a fit and proper person to hold a licence, that he has not been disqualified from holding a licence and that he has not, after the coming into operation of the Ordinance, lent money to a person under 18 years of age. In the case of a company or firm, the manager must so satisfy the Registrar. The licence would show the moneylender's true name, his business name and the address at which he is authorised to carry on business. A list of licensed moneylenders will be published in the Government Gazette. A moneylender who is refused a licence may appeal to the Minister, whose decision shall be final. A court is authorised to suspend or forfeit the licence of any person convicted by it of an offence under the Ordinance and to disqualify any such person from obtaining a fresh licence.

When lending money, moneylenders are required to have a written memorandum in the English language signed by the borrower containing all the terms of the contract, particularly the date, the principal and the rate of interest. At the Committee stage of this Bill, Mr Speaker, Sir, I propose to move an amendment to provide that the memorandum shall, where there is more than one borrower, state the amount paid to each of the borrowers and the amount payable by each of the borrowers or sureties. A copy of the memorandum must be given to the borrower.

Where the loan is for $100 or more, payment of the loan is required to be made by crossed cheque, crossed postal order or crossed money order. The purpose of this provision is to protect the borrower from acknowledging the receipt of a greater sum than that actually received by him, and it will also incidentally help the moneylender in proving the amount of the money lent, the burden of which is placed on him under the Bill.

The moneylender is required to state his licence number on the note or memorandum, including promissory notes, setting out the terms of the loan, and he is also required to hand a copy of such notes or memoranda to the Commissioner of Stamps, who is then required to forward them to the Comptroller of Income Tax.

Every moneylender is required to keep, in permanent books, regular accounts of each loan, and also prescribed books of accounts including a cash book. The Registrar may inspect the books under conditions of secrecy and the moneylender is required to submit quarterly statements of his cash and loan accounts.

The court is authorised to reopen moneylending transactions and to give the debtor relief where the interest is excessive and the transaction harsh and unconscionable, so that we may get into a situation where some moneylenders may appear as defendants in our courts, and the courts will be able to order these moneylenders to refund part of their unjust earnings to those whom they have hitherto held in thrall.

A debtor, Sir, may apply to the court for relief at any time and not merely when proceedings have already been instituted against him by the moneylender. Where the interest exceeds 18 per cent per annum on unsecured loans or 12 per cent per annum on secured loans, such interest shall be presumed until the contrary is proved to be excessive and the transaction harsh and unconscionable.

Moneylenders are not allowed to charge for expenses other than stamp duties, fees payable by law and legal costs incidental to the loan, and cannot receive interest under the guise of expenses. Borrowers who have paid such illegal charges are allowed to recover them.

The borrower is allowed to repay any money lent or interest thereon by cheque, money order or postal order, and where a cheque, money order or postal order has been posted to the moneylender at his authorised address, the presumption arises that the amount stated in the cheque, money order or postal order has been paid to the moneylender.

Where borrowers do not understand English, the note must be attested by an advocate and solicitor, or magistrate or other responsible person who shall explain the note to the borrower and certify that this has been done. The money must be paid over in the presence of the attestor.

Moneylenders who make any note or memorandum, or who take a security for their loan, a promissory note or other contract for the repayment of money, in which the principal or rate of interest is not fully stated or is left blank shall, on conviction, be liable to a fine not exceeding $500 and, in the event of a second or subsequent conviction, imprisonment of not more than six months or a fine of not more than $1,000 or both.

Co-operative societies, bankers, pawnbrokers and certain corporations and societies and all those who only lend money doing so merely in the course of and for the purpose of any business not having as its primary object the lending of money, are excluded from the definition of "moneylender" and are therefore not affected by the Bill.

Mr Speaker, Sir, the Government does not pretend that this Bill will put a stop to the malpractices that are carried on by certain very unscrupulous moneylenders in Singapore but it seeks to serve notice on all those who are taking part in those malpractices that as and when reports are made to us and if the public is able to show that there are loopholes in this Ordinance through which moneylenders can escape, I can assure them all that we shall do our utmost to see that further legislation is introduced to put a complete stop to these malpractices.

Question proposed.

7.10 p.m.

Mrs Seow Peck Leng (Mountbatten): Mr Speaker, Sir, I am glad that the Minister for Labour and Law assured us that if malpractices are found in the future, further legislation will be enforced.

In rising to support this Bill, I would like to make a few comments. This Bill is laudable for the fact that it protects the poor from the clutches of unscrupulous moneylenders. This Bill, in my opinion, should be implemented as soon as possible to ease the hardship of those already victimised and to prevent those who, because of financial difficulties, may be victimised in the future. However, I do hope that Government will give a thought to the seemingly unavoidable loopholes in the Moneylenders Bill which the moneylenders will find, as the Minister himself had said. The Government's fight will not be only against the moneylenders but also against those who abet the moneylenders. Strange as it may seem, the very people whom this Bill is supposed to protect are the worst offenders. To mention one example, clause 16 (2) reads as follows

"... no security given by the borrower or by any such agent as aforesaid in respect of any such contract shall if the amount of the loan is one hundred dollars or above be enforceable unless the money lent was given to the borrower or his agent in the form of a crossed cheque or crossed postal order or crossed money order made payable to the borrower or his agent."

Sir, in spite of this, nothing prevents the borrower from agreeing to return part of the amount that appears on the cheque even when the loan is in the form of a cheque. He may even be required to provide the difference between the actual loan and the amount that was signed for, before the cheque for the full amount is handed to him. Moreover, clause 16 (2) - the one I have just read - only provides for loans of not less than $100. It is the very, very poor, Sir, who need protection most, who usually take loans of less than $100, and I think that they are the ones who should be protected.

The Sunday Mail of 30th August reported:

"Horse-racing, character lotteries, mahjong and cards in that order caused the downfall of the thousands now in the clutches of the moneylender."

Sir, it must be admitted that people who get into debt because of horse-racing, character lotteries, mahjong and cards are irresponsible people, and when irresponsible people are desperately in need of money, "reckless" is a mild term to use to describe them. They therefore will be prepared to break all rules and regulations and even abet moneylenders so long as they get the money, some in spite of the knowledge that it is detrimental to themselves; and there are some who will sign any form of contract, because they have not the slightest intention of abiding by the contract. Sir, this is a more difficult obstacle to overcome than the difficulty posed by the moneylenders themselves.

I am confident that with the experts that the Government has in the Ministers and with the legal mind of a brilliant lawyer that is in our Prime Minister, it should not be impossible to find a way of overcoming this difficulty. The Government claims to have been very successful in their education campaign in literacy, language and politics. Perhaps I may be permitted to suggest that Government launches another education campaign to educate irresponsible and reckless people who do damage not only to themselves and their families, but also to innocent and deserving parties. It is the irresponsible actions of these reckless people that raise the degree of risk that moneylenders have to take. To cover this risk, moneylenders resort to all sorts of means of raising interest illegally. And the poor man who is desperately in need of money for a deserving cause, like illness in the family maybe, will have to suffer the same consequences as the reckless gambler. Bearing this in mind for a later improvement on the Bill, I support it wholeheartedly.

Another point for the Government to bear in mind in connection with this Bill is that the very poor people, who have no status to support them and may find it very difficult to get loans from moneylenders, go to pawnshops with articles which they can hardly do without - sometimes as bad as their own coats or their wives' sarongs - just to tide them over a difficult period of, let us say, illness. These are the people who deserve pity and should be helped. And these are the people who are paying 24 per cent interest on a loan, sometimes 30 per cent if the loan is less than $5, as against 12 per cent as provided in the Moneylenders Bill for secured debts.

Sir, I hope in the spirit of this Moneylenders Bill, the Government will consider in the near future amending the pawnbrokers' rate of interest to bring it to a fairer balance with that of the Moneylenders Bill.

7.18 p.m.

Mr John Mammen (Telok Blangah): Mr Speaker, Sir, whenever we hear the word "moneylender", two communities are associated with it, even if they are good - the chettiars and the Sikhs. If we have a good Sikh friend who visits the house, people around would think that we are borrowing money.

Mr Speaker, Sir, from my point of view as a worker, I would like to stress a particular point. In the trade union movement, it is usual to see pickets before an office when they are on strike to fight the employers. But on pay days, Sir, we see two kinds of picketing without placards - one with a turban and beard, and the other with a dhoti and an umbrella. Such picketing can always be seen in front of Government offices, the City Council, the Harbour Board, or any other well established offices, on any pay day at about 4 o'clock, and the pickets are waiting for borrowers to come forth from offices. And these employees when they are badly in need of money easily succumb to the grip of the moneylenders, who use nice words, and show no interest in recovering the principal loan, but simply say, "Kalau wan tidak ada wang, ta'apa. Baya bunga dahulu." [If you have no money, it does not matter. Paying interest will do.] Mr Speaker, Sir, if a man borrows $200, he might agree to pay the moneylender 12 monthly instalments of $30 each to clear the debt. And if the man is financially tight on a pay day, the moneylender would usually pay him $10 and say, "Kalau tuan ta'apa wang, ta'apa. Sim pan dahulu." [If you have no money, it does not matter. Keep it first.] This $20 is paid as interest only, and this is carried on for years, and the capital remains as it is - $200. And therefore the moneylender, in about four years, would have collected about $800 as interest with a capital of $200 still outstanding.

When we talk about moneylending, there are many cultural traditions that Indians have brought to Singapore and Malaya. Among these is the money-lending culture. Of the Sikh community, Sir, if you look through the passport of a Sikh who comes to Malaya, never can you find their occupation stated as moneylender; almost all come for jobs - as jagas, or watchmen. And wherever they work, they begin lending money, and accumulate money. Sometimes they form a money-lending association, and usually we find that about 99 per cent of these Sikh moneylenders are not licensed. If they cannot find a borrower in his office, they would go straight to his home. And if he is not there, they would intimidate his wife and say, "Look here, if you are not going to pay my interest, I am going to prosecute your husband."

Under the existing law, when a man is employed, he cannot do any money-lending business. But this is going on in Singapore; there are people working and also doing moneylending business. So when we combat these two types of moneylenders - the chettiar community and the Sikh community - I should say that the chettiars are more reasonable and have consideration for the borrowers' difficulties than the Sikhs. Mr Speaker, Sir, the law states that for a loan of more than $100, it should be paid by a crossed cheque and, as the hon. Member for Mountbatten has just mentioned, maybe some bargaining may be made in the signing of the documents, such as after the borrower has got the money from the bank he must pay to the moneylender whatever difference he has agreed to pay between the stated loan and actual sum received. In such a case it is up to the borrower himself to decide, once he has got the crossed cheque, whether or not he should pay the difference.

One point which I am strongly in favour of in the Bill is the prohibition of moneylenders besieging places of employment or residence. As it is, these moneylenders would not allow the borrowers to sit in their offices, to go to their houses, or even to a coffeeshop to drink coffee. That is the main thing. If a man needs money, he can go as a gentleman to a licensed moneylender and sign a loan, because the moneylender has a furnished and licensed office with a notice board. So this is a very good clause. And even if the rate of interest is 18 per cent or 12 per cent, it is in line with the Federation's policy.

And when this Bill is passed, most of the unlicensed moneylenders now would be unable to issue summons for past contracts. In the past, the borrowers just signed promissory notes with which the moneylenders could sue them and say, "Look, if you are not going to pay, I will summon you. So, if you cannot pay all, you had better pay the interest."

Therefore, Mr Speaker, Sir, this Bill is a great relief for the workers, and it is my earnest belief that the majority of the workers support the Government on this Bill.

7.26 p.m.

Inche Buang Bin Omar Junid (Kallang): (In Malay): Mr Speaker, Sir, I wholeheartedly support this Moneylenders Bill, moved by the Minister for Labour and Law. Indeed there are still in Singapore many unscrupulous moneylenders who hold the poor people in their clutches. We know, and the general public knows too, that the moneylenders, licensed and unlicensed, are cinema attendants, godown jagas, and many other watchmen, who are also prepared to lend money to the poor people, and suck the blood of the masses.

Mr Speaker, there is another point I would like to mention. I know about this matter personally. For instance, a man borrows $100, but he signs for a loan of $200. The borrower accepts the terms because of forced circumstances, or of hardship. But the moneylender has no pity or mercy for the poor or those who are in need of help.

Another point, Mr Speaker. When the time for payment comes, i.e. at the end of the month - as I personally have witnessed or known - almost in every office in Singapore the moneylenders would wait in a long queue, reminiscent of the Japanese occupation when there were long queues to purchase cigarettes, with people pushing here and there. These moneylenders would queue up in that manner in order to recover money loaned to the borrowers. This, if left unchecked, will, I think, not only be detrimental to the borrowers but also to the moneylenders. It may be that the borrowers are working for a certain employer and the employer will no doubt act, with a dismissal of the employee. With the Bill moved by the Minister for Labour and Law, I believe and I am confident that this will bring about an improvement to the conditions for the benefit of both the borrower and the lender. And another factor that also strengthens the case for approval of this Bill is that it can educate those people who are in the habit of borrowing money from moneylenders, and that the moneylenders will come to realise the hardship of the borrowers and abide by these regulations. There is a certain section of the people who do not have difficulty in getting food, Mr Speaker, but nevertheless they land themselves in difficulties; not because of the force of circumstances, but because they want to attend cinema shows or purchase luxuries. And there is another section who wish to observe marriage traditions and fulfil certain obligations to their brothers or sisters and so on.

Mr Speaker, I am confident that if this Bill is enforced, I am sure the moneylenders who are always lending money will realise the conditions of the people of Singapore.

7.31 p.m.

Mr Byrne: Mr Speaker, Sir, the Member for Mountbatten just now asked why it was that the Bill did not require loans of less than $100 to be made by way of a crossed cheque. She suggested that such an omission would defeat the very purposes of this Bill in the sense that this Bill has been designed to protect borrowers of small sums. I would remind the Member for Mount-batten that the majority of the people who are held in thrall by the moneylenders are poor people, and most of them are the people who take loans of less than $100 from unscrupulous moneylenders. It has been the practice in the past for these moneylenders who lend sums of less than $100 to these poor people to require them to sign promissory notes for larger amounts.

Now, that will not be possible under this present Bill because the moneylenders will be forced to enter a sum of less than $100 on the note and cannot require them to sign for more. If he requires them to sign for more, he will have to pay them by way of a crossed cheque, and it is for that reason that loans for less than $100 are not required to be made by crossed cheques.

There is the other point that the Member for Mountbatten has made. She said, and I agree with her, that this Bill itself is not likely to put a stop to fraudulent practices and other malpractices on the part of unscrupulous moneylenders. If she knows of other dodges which are being used to defeat the purposes of this Bill, I would invite her to bring these dodges to the attention of the Government. I can assure her that we will introduce, if necessary, amending legislation to put a stop to these dodges, because we are determined to see that all these malpractices are put an end to immediately.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole Assembly.

Assembly immediately resolved itself into a Committee on the Bill. - [Mr Byrne].

Bill considered in Committee.

[Mr Speaker in the Chair]

7.36 p.m.

Clauses 1 to 7 inclusive ordered to stand part of the Bill.

Clause 8 -

Mr Byrne: Mr Speaker, Sir, I move,

In page 5, line 3, after "months", to insert "or to both such fine and imprisonment".

This, Mr Speaker, Sir, is to provide for the imposition of both a fine and an imprisonment in appropriate cases.

Amendment agreed to.

Clause 8, as amended, ordered to stand part of the Bill.

Clauses 9 to 15 inclusive ordered to stand part of the Bill.

Clause 16 -

Mr Byrne: Mr Speaker, Sir, I move,

In page 10, line 31, after "principal;", to insert-

"(c) the amount paid to the borrower or (where there is more than one borrower) to each of the borrowers;

(d) the amount payable by the borrower or each of the borrowers and by the surety or each of the sureties;".

Mr Speaker, Sir, this amendment is to provide that the notes or memorandum shall, where there is more than one borrower, show the amount paid to each of the borrowers and the amount payable by each of the borrowers or sureties.

Amendment agreed to.

The Chairman: There is a note in page 10, line 32, to leave out "(c)" and insert "(e)". This is, of course, consequential to the amendment just passed.

Clause 16, as amended, ordered to stand part of the Bill.

Clause 17 ordered to stand part of the Bill.

Clause 18 -

Mr Byrne: Mr Speaker, Sir, I move,

In page 11, line 33, after "of", to insert "subsection (1) of".

This amendment, Mr Speaker, Sir, makes it clear that the reference in subsection (2) is to subsection (1) of the clause.

Amendment agreed to.

Clause 18, as amended, ordered to stand part of the Bill.

Clauses 19 and 20 ordered to stand part of the Bill.

Clause 21 -

Mr Byrne: Mr Speaker, Sir, I move,

In page 14, line 5, to leave out "eight" and insert "four".

In line 7, I move, Mr Speaker, Sir, -

The Chairman: Will the Minister please move one amendment at a time? Perhaps he would like to explain why the figure has been changed to "four".

Mr Byrne: Mr Speaker, Sir, the interest rate which may be allowed on bankruptcy is reduced to 4 per cent to fall in line with section 43 (8) of the Bankruptcy Ordinance which provides that interest shall be calculated at the rate of 4 per cent per annum. This was an omission on our part.

Amendment agreed to.

Mr Byrne: Mr Speaker, Sir, I move,

In page 14, line 7, to leave out "creditor" and insert "moneylender".

Mr Speaker, Sir, this amendment is made to give clarity to the section.

Amendment agreed to.

The Chairman: Mr Byrne, the third amendment. The Minister will move simpliciter.

Mr Byrne: Mr Speaker, Sir, I move,

In page 14, line 18, to leave out "eight" and insert "four".

This is for the same reason as I have just given, Sir.

Amendment agreed to.

Mr Byrne: Mr Speaker, Sir, I move that a new sub-clause be added.

In page 14, line 20, at end, to add

"(3) Where on the date of the coming into operation of this Ordinance property is vested in the Official Assignee by reason of any adjudication or vesting order or other order having the like effect, made under the provisions of the Bankruptcy Ordinance or which is the subject of a composition or scheme of arrangement approved thereunder, but where no dividend has been declared or payment by way of dividend has been made, the provisions of subsections (1) and (2) of this section shall apply notwithstanding that the order vesting the property or a receiving order made in respect of it was made or the composition or scheme of arrangement was approved or any debt provable or payable in respect of it was incurred before the date of the coming into operation of this Ordinance.".

Mr Speaker, Sir, a new subsection (3) is added to provide for cases where adjudication, administration or vesting orders have already been made and to give retrospective effect to the provisions of this section.

Amendment agreed to.

The Chairman: There is a note in page 14, line 21, to leave out "(3)" and insert "(4)". This is consequential to the amendment just made.

Clause 21, as amended, ordered to stand part of the Bill.

7.45 p.m.

Clause 22 -

The Chairman: There is a note in page 14, marginal note, to leave out "19" and insert "20". That will be done.

Mr Byrne: Mr Speaker, Sir, I move,

In page 15, line 6, to leave out "debtor" and insert "borrower or other person sued".

This amendment is made, Mr Speaker, Sir, to avoid the use of the terms "debtor" and "creditor" and for the sake of clarity to refer to the "borrower" and the "moneylender".

Amendment agreed to.

Mr Byrne: Mr Speaker, Sir, I move,

In page 15, line 6, to leave out "creditor" and insert "moneylender".

This is for the sake of clarity.

Amendment agreed to.

Clause 22, as amended, ordered to stand part of the Bill.

Clause 23 -

Mr Byrne: Mr Speaker, Sir, I move,

In page 16, line 7, after "of" where it first occurs, to insert "a".

This is to supply an omission, Sir.

Amendment agreed to.

Clause 23, as amended, ordered to stand part of the Bill.

Clause 24 ordered to stand part of the Bill.

Clause 25 -

Mr Byrne: Mr Speaker, Sir, I move,

In page 17, line 10, to leave out "lender" and insert "borrower".

This is to correct an error. "Lender" should be "borrower".

Amendment agreed to.

Clause 25, as amended, ordered to stand part of the Bill.

Clause 26 -

Mr Byrne: Mr Speaker, Sir, I move,

In page 17, line 34, to leave out "that" and insert a comma.

This is to improve the drafting of the clause.

Amendment agreed to.

Clause 26, as amended, ordered to stand part of the Bill.

Clauses 27 to 30 inclusive ordered to stand part of the Bill.

Clause 31 -

Mr Byrne: Mr Speaker, Sir, I move,

In page 20, line 21, to leave out "leader" and insert "moneylender".

This is for clarity.

Amendment agreed to.

Clause 31, as amended, ordered to stand part of the Bill.

Clause 32 ordered to stand part of the Bill.

Clause 33 -

Mr Byrne: Mr Speaker, Sir, I move,

In page 21, line 2, after "months", to insert "or to both such fine and imprisonment".

This is to provide the imposition of both a fine and imprisonment in appropriate cases.

Amendment agreed to.

Clause 33, as amended, ordered to stand part of the Bill.

Clause 34 ordered to stand part of the Bill.

Clause 35 -

Mr Byrne: Mr Speaker, Sir, I move,

In page 21, line 36, to leave out "the" where it thirdly occurs and insert "this".

This is to correct a grammatical mistake.

Amendment agreed to.

Clause 35, as amended, ordered to stand part of the Bill.

Clause 36 ordered to stand part of the Bill.

First to Third Schedules inclusive ordered to stand part of the Bill.

Bill reported with amendments; read the Third time and passed.