Efforts to rein in the problem of unsecured loans, such as credit card debt, appear to be paying off.

The number of such borrowers in dire straits - and the total amount they owe - has dropped sharply from two years ago.

In March, there were 14,000 borrowers who had racked up unsecured debt of more than 24 times their monthly income - with interest piling up. They owed $2.2 billion in total.

This is down from the 32,000 borrowers in February 2015 who had run up unsecured debt of more than 24 times their monthly income, according to the Monetary Authority of Singapore (MAS). At that point, these borrowers owed $4 billion - almost twice the current debt level for this group.

Unsecured debt includes debt on credit cards, overdraft facilities and personal loans for which there is no collateral. It usually attracts higher interest - upward of 24 per cent in the case of credit cards - and can get borrowers into trouble if the debt becomes too high.

MAS has been working with banks to make sure such debt does not become unsustainable. Schemes, including repayment assistance and debt consolidation, have been introduced to help borrowers reduce their debt burden. They also receive counselling.

Another initiative to help borrowers avoid the credit trap involves phasing in limits on the total amount of credit card and other unsecured debt they can hold. This effort began in June 2015, when the limit was 24 times the monthly income for three months in a row. From June 1 this year, the limit was cut to 18 times the monthly income. It will be further slashed to 12 times one's monthly income from June 1, 2019.

The limit applies to interest-bearing balances on personal unsecured credit facilities. It excludes secured loans such as property and car loans as well as unsecured loans for business, medical spending and education.

Borrowers who exceed the prevailing 18 times borrowing limit can expect to get warning letters or text messages from their banks for three consecutive months, starting on June 1. Their unsecured credit facilities will be suspended by Aug 31 if their debt level remains above 18 times their monthly income by then.

This means they will be unable to charge purchases to their cards, issue cheques or draw money from their unsecured credit line. Nor can they apply for new facilities or higher credit limits.

Mr Matthias Dekan, head of customer value management at HSBC Bank (Singapore), said: "The progressive lowering of the borrowing limit is good for the market as it forces individuals to be more disciplined in their spending and in managing their debts."

The limits do not apply to borrowers with an annual income of at least $120,000 or with net personal assets exceeding $2 million.