The Straits Times says

Strapped for cash, stripped of dignity

The digital twist in the brazen tactics of loan sharks, which have long been part of urban lore, was not surprising given the ever-increasing overlap of cyberspace and the real world. Sadly, the online shaming of "small fish" debtors intensifies the travail of those caught between loan sharks and the deep blue sea. Not only does the Internet offer the means to bait unwitting and desperate borrowers, it also enables illegal moneylenders to set up a pillory that is both hard to bear and to remove. By posting personal details (including confessional videos and pictures extracted as collateral) on social media, loan sharks can put intense pressure on debtors and their hapless family members.

In a number of cases, victims could have averted their predicament by not succumbing to the lure of a faceless transaction and by checking the legitimacy of lenders, however seductive their online claims and the slick appearance of their websites. Licensed moneylenders are not permitted to advertise in cyberspace and must make loans in person at their place of business. Aside from those who were duped into dealing with usurious loan sharks, many borrow intentionally from them when debts mount and funds are needed to meet high interest payments. Ironically, the tougher the action taken against criminals, the steeper the loan rates and more unscrupulous the tactics employed against defaulters - which perversely includes the practice of turning debtors into runners charged with the task of tormenting their fellow victims.

As the law must continue to be rigorously enforced to curb gouging, ways must be sought to reduce the dependence of the poor on loan sharks. Even if financial literacy programmes are made widely available, it's unrealistic to expect the less well-off to always live within their means, as an urgent need for money will arise from time to time. But those with low-incomes often have no or limited access to credit. The initial sum typically sought is about $2,000, which might be manageable if borrowers stick to licensed moneylenders who are bound by rules that cap interest rates and late fees. But when their debts spin out of control, people might find themselves in the grip of loan sharks who coerce borrowers to become guarantors for each other or seek their SingPass access.

To comprehensively address this social issue, action should not be limited to reining in underworld activities. Different forms of micro financing should also be examined to help people who are financially stretched and those who want a modest sum to develop specific work skills or to invest in a viable trade. Elsewhere, models have been developed for particular environments, like the award-winning Grameen Bank. Singapore needs to work out a model to suit its situation. Credit is at times a necessity in today's world.

A version of this article appeared in the print edition of The Straits Times on August 30, 2017, with the headline 'Strapped for cash, stripped of dignity'. Print Edition | Subscribe