CHIT FUND COMPANIES (Measures to regulate operations)

Mr Hwang Soo Jin asked the Minister for Finance what measures have been introduced to regulate the registration and operation of companies managing chit funds.

The Minister for Finance (Dr Goh Keng Swee): Sir, the Research Division of my Ministry has been studying the subject in some depth. There has been no evidence that these companies have been established to defraud the public. Some of the larger concerns are achieving substantial turnovers and are providing participants who borrow with useful, if expensive, credit and those who lend with high, if risky, returns on their investments.

These companies are registered under the Companies Act, and there are no legal powers to regulate their operations under this Act. Whether the subject merits new legislation is being considered in my Ministry.

Mr Ng Kah Ting: Since the Ministry of Finance has studied this subject in some depth, will the Minister disclose to this House the number of chit fund companies in Singapore and the various amounts of paid-up capital?

Dr Goh Keng Swee: I intend to publish the findings of the Research Division in an information paper in the course of time. There are now 23 companies registered under the Companies Act. I do not have the details at hand of their total capitalisation. But, as I said earlier, some of them are quite considerable. For instance, the biggest of them has an average monthly auction value of $862,000. The average monthly amount collected from members of various groups of this company was $615,000 and the monthly amount paid by way of loans was $497,000. This shows the scale of operations of some of these companies.

Mr Hwang Soo Jin (Jalan Kayu): Can the Minister say whether to date any company has failed in its operations?

Dr Goh Keng Swee: Not to my knowledge, although the trouble will start when members or clients of these companies default on their payments. This has happened and has led to action taken in the civil court.