The Association of Banks in Singapore's (ABS) debt consolidation plan is worthy of applause ("New plan to help borrowers cut debt"; Jan 18).

On one side of the equation, eligible debtors of unsecured loan products who are in genuine financial hardship get a reprieve from banks' credit collection activities and have their unsecured debt reduced to an affordable payment plan with a single bank.

On the other side of the equation, creditor banks get to minimise their losses.

The economy faces a challenging future ("Singapore will have done well if it grows 2-3 per cent a year over next decade: PM Lee"; ST Online, Jan 21) and Singaporeans will need to be financially prudent.

In addition to initiatives like the new scheme, the authorities should also continue to rein in excessive unsecured lending to vulnerable individuals who have a higher propensity to land themselves in a financial maelstrom. This could be achieved through more robust oversight of banks and how they risk-assess unsecured debt applicants.

In terms of education, emphasising the adoption of financial best practices needs to continue, such as exercising financial prudence and initiating contact with banks to negotiate an affordable payment arrangement if lean times are anticipated.

Imbuing our children with the right attitude towards money management is a good, prudent start.

Woon Wee Min