It will issue licenses for up to 16 outlets that will implement their business models.
The Ministry of Law (MinLaw) called for proposals to pilot new business models for moneylending in order to "better protect borrowers through business-led improvements in the moneylending industry."
According to an announcement, MinLaw plans to issue moneylending licenses for up to 16 outlets, equivalent to less than 10% of the 164 outlets currently operated by licensed moneylenders.
Each successful applicant may be granted approval to implement its proposed business models in up to four locations for up to two years. Existing moneylending licensees may submit proposals under this pilot. If selected, they will be subjected to the higher standards stipulated in their proposal.
All pilot proposals must fulfil specific criteria that have higher standards over and above the current legal requirements for licensed moneylenders, including applicant profile, soundness of business model, and professional debt recovery practices, amongst others.
Applicants must have paid-up capital of at least $1m, to ensure that they are of sufficient financial standing, MinLaw said.
The applicants should also show their track record in providing consumer credit, whether in licensed moneylending or in other sectors of consumer credit.
MinLaw noted that business proposals that meet the mandatory criteria will be assessed based on the proposed effective cost of credit and credit policies, which include the criteria for assessing the credit-worthiness of each applicant, the criteria for deciding the quantum of credit that should be granted, procedures for processing and approving loan applications, and policies on the identification and management of problem loans and defaults.
"Favourable consideration will be given to applicants with credit policies that rely on objective and/or quantitative evidence to ensure that each loan is sustainable. Additional measures to ensure the health and sustainability of each loan, such as credit monitoring practices, will also be duly recognised," it added.
The validity of the pilot licence is expected to begin in 2019 and conclude in 2020, following which MinLaw will evaluate the results of the pilot and consider options for refining the moneylending regulatory regime.
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