A reader wrote to the Straits Times that there is a need to find a solution for people in need of cash, so that they do not have to rely on loan sharks. For these people, the loan sharks are the only source of cash, even though the interest rates are exorbitant, and the loan sharks have to resort to criminal activities to enforce the repayments.
Some people resort to loan sharks due to gambling debts (which can be avoided). Others are forced to borrow money due to unemployment or big medical bills.
I encourage people to have personal savings, so that they have money to draw down during these emergencies. There is a case for the community to provide funds for people who are in need of temporary cash due to factors beyond their control. They are required to pay back the borrowings, but the rate of interest should be kept modest.
Many developed countries have unemployment benefits, which are given to people who lose their jobs. The benefit is paid for a certain period, such as 12 months. Beyond that, they can receive a lower amount of welfare benefits to survive.
My proposal for a community-based borrowing is less generous that the safety net available in the advanced countries. But, it is better than a "loan shark" scheme that is practiced here.
Tan Kin Lian
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