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Man borrows ₹1.7 crore from moneylender, ends up having to repay ₹146 crore
A Singapore man borrowed S$250,000 ( ₹1.7 crore) from a moneylending company and ended up having to repay nearly S$21 million ( ₹146 crore)
A Singapore man borrowed S$250,000 ( ₹1.7 crore) from a moneylending company and ended up having to repay nearly S$21 million ( ₹146 crore) due to high interest rates and other penalties.
According to a report in The Strait Times, the man not only saw his debt balloon to S$21 million but also lost his home.
Here’s what happened
The Singapore man, who was not named in the report, borrowed S$250,000 from a licensed moneylending company somewhere between 2010 and 2011. The company charged him an interest rate of 4% per month.
He was also charged late payment interest of 8% per month, and was handed a late payment processing fee of S$2,500 per month for the initial loan.
In just four years, due to these levies and the high interest rate, the man’s loan had shot up from S$250,000 to S$3 million.
Man sells home
In July 2016, the man was having trouble keeping up with the repayments. In order to ensure that his family had a roof over their heads, he sold his home to the director of the moneylending company for S$2.1 million ( ₹14 crore).
He signed a rental agreement with the director, promising to pay a rent of S$7,000 to S$8,500 per month.
However, the debt continued to grow. By the end of 2021, it amounted to nearly S$21 million ( ₹146 crore).
How the case came to light
The man’s case came to light after he and the director of the moneylending company ended up in district court over unpaid rent and his refusal to leave the home he had sold to the director.
During the appeal, High Court Judge Philip Jeyeratnam found there were grounds for further investigation. He ordered a retrial to check if both the loan and rental agreements involved any illegality.
(Also read: Laid-off Bengaluru techie’s ₹78k EMI reignites rent-versus-buy home debate)
“In my judgment, it shocks the conscience that borrowing S$250,000 has led to (the borrower) being indebted – through the accumulation of interest and so-called late payment fees – in the tens of millions,” the judge said.
The director of the moneylending company disagreed with the retrial, saying the man was “the author of his own misfortune” and that the court did not have the full picture.
However, the judge noted that the debtor had claimed the tenancy agreement was a sham and the loan agreements should be reviewed for possible fraud, deceit, or breach of statutory duties.
The judge said it was only fair to investigate how the man ended up selling his home to the director and then becoming his tenant.
