Amid rising criticism of commercial loan firms over their exorbitant interest rates and frequent trouble with clients, the Financial Supervisory Agency said Wednesday the three leaders in the industry have charged an average of 20.87 percent in interest on loans, or about nine times the rate they pay to borrow funds.

Sources said, however, that the collateral-free guaranteed loan lenders, which target small and midsize businesses, often charge 30-plus percent on loans.

The agency said at a Lower House Finance Committee session that it estimates that Nichiei Co., Shohkoh Fund & Co. and Shinki Co. borrow at 2.33 percent.

Although their interest rates do not appear to be illegal, calls for measures to lower the rates and impose tighter controls on the industry are expected to come up in future Diet sessions, sources said.

The Interests Regulation Law sets maximum annual interest rates at 15 percent to 20 percent, but the law does not impose penalties on violators.

The binding Investment Law sets maximum rates at 40.004 percent, and commercial loan firms seem to keep their rates below that level, the sources said.

Finance Minister Kiichi Miyazawa said, “the 40 percent (interest rate) is obviously high. But someone would borrow money (even at that rate), and the government has tried to control the situation.”

Financial Reconstruction Commission chief Michio Ochi hinted that a review of lending laws may be undertaken in response to disputes with borrowers.

Commercial loan firms are unique in that they are not obliged to inform the legal guarantors of borrowers when the borrowers take out more loans.

The system, in addition to high interest, has triggered various problems in recent years, the sources said.

The FSA said it can only wait and see whether lenders will act to resolve problems with their clients based on new guidelines the industry voluntarily mapped out recently.

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