Steps are being taken to address one of Singapore's darkest and most painful open secrets: Of how some people, strapped financially and desperate for help, borrow from moneylenders - only to find themselves walking into a debt trap.
These are registered moneylenders, not loan sharks, that lead to this dark hole.
A new panel will now study issues like capping interest rates and loan amounts and restricting fees charged by moneylenders.
The cases that have emerged and the numbers that surround them paint a troubling picture.
Borrowers who earn less than $30,000 a year can be charged an interest rate of 13 to 20 per cent each month, while those earning more have to negotiate a rate with the lender - not including late payment charges.
And effective interest rates can even amount to as much as 159,000 per cent a year, according to Member of Parliament (MP) Zainal Sapari.
He was among the MPs who called for more measures to regulate the moneylending sector during the Budget debate in March.
Mr Zainal cited the example of a security guard who took out a loan of $1,600 and ended up paying an extra 40 per cent over five weeks in interest alone. In addition, every late payment drew a charge of $800.
People eventually end up paying more than they had borrowed, he said.
"And it doesn't make sense because they are usually those who are already facing financial problems, but their debt just keeps perpetuating."
Worse still, Mr Zainal pointed out, some moneylenders require borrowers to pay up on a weekly or fortnightly basis once they default on their monthly instalments.
"But many borrowers eventually continue to default on their weekly payments since their salaries come in at the end of each month, and they end up incurring the high late payment charges."
Dick Lum, executive director of One Hope Centre, which counsels gambling addicts, told My Paper that many of those in debt also take up loans across 10 to 20 moneylenders.
"Some also open several accounts at once with one moneylender, so they can borrow more," he noted. "This continuous borrowing then just spirals out of control."
One way out of this practice would be to have a shared database that could show just how much a person has borrowed from different moneylenders, said David Poh, president of the Moneylenders Association of Singapore, who sits on the committee.
"Having loans on record would make processes more transparent, and also help to make the industry healthier," he said.
Capping the aggregate amount of moneylending loans taken out by each borrower is one of the issues the committee will look at.
But he cautioned against not edging the licensed moneylenders out of business. "Otherwise, the illegal moneylenders will come in to fill the void," said Mr Poh.
Nominated MP Tan Su Shan told My Paper that the uneven playing field within the industry was a concern. Consumers should be able to avail themselves of credit restructuring help, should they need it, she said.
"Having clearer guidelines for the moneylending industry will also keep interest rates in check and protect consumers from incurring unnecessary fees," said Ms Tan.
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