Concern groups say problem may worsen among low-income borrowers, including foreign domestic helpers, if new regulations are too restrictive
Taking loans from unlicensed money lenders in Hong Kong could become a bigger problem among low-income debtors, including domestic helpers, if the government’s plan to regulate licensed operators overly restricts their borrowing, concern groups have warned.
The issue was raised on Tuesday a day after the Financial Services and Treasury Bureau launched a two-month public consultation on enhancing regulation on licensed money lending.
Among the proposed measures, the government would set an aggregate cap on unsecured personal loans based on the borrower’s monthly income. Those earning HK$5,000 (US$637) or less a month would not be allowed to borrow an amount exceeding their monthly income. The limit would be set at two months’ income for people earning between HK$5,001 and HK$10,000.
As an alternative plan, the authorities could also cap the debt ratio of a borrower’s income. For those having a monthly income of HK$5,000 or less, the monthly repayment should not be more than 35 per cent of their income. The rate should be lower than 40 per cent for those earning between HK$5,001 and HK$10,000.
