A legal moneylender is a financial institution that is licensed by the Ministry of Law and is obligated to adhere to regulations set out by the government in terms of operations, lending requirements and interest rates. They are also able to take legal action against you in the event of your inability to repay your loan.
The total charges that a moneylender can impose on any personal loan – including interest, late interest and upfront administrative fees – cannot exceed the principal amount of your loan. In addition, they can only make collection calls and visits to your home or office when it is in the course of normal business hours, and they must have your written consent before attempting to collect your debt.
Licensed money lenders are not allowed to use threatening language, harass you or your family members, or scream at you. They can also not inform your friends or neighbours about your debt without your consent, nor tamper with your property. In fact, they are not even allowed to assemble in groups of five or more people and knock on your door (unless they have a court order known as a Writ Of Seizure And Sale).
Legal moneylenders should also clearly display their licensing details at their premises. They must not advertise their services on third party applications such as WhatsApp, and they can only solicit business through advertisements on websites that belong to them, in the Moneylenders’ Association’s directory or at their own physical offices. They are also prohibited from sending text messages or making phone calls to promote their services.