Financial Reconstruction Commission Chairman Michio Ochi said Friday that he has urged Katsuyuki Sugita, chairman of the Japanese Bankers Association, to restrain bank lending to “shoko” commercial loan companies.

It is problematic that banks, especially those that have received a capital injection of public funds, lend money to such loan companies, Ochi told a regular news conference.

Although banks have voluntarily suspended lending to shoko lenders in response to a recent public outcry, he said he feels the need to take some kind of administrative measures regarding the problem.

Ochi said he relayed his concern to Sugita, who is also president of Dai-Ichi Kangyo Bank. DKB has especially drawn flak for providing a huge amount in loans to Nichiei Co., one of the three major shoko institutions.

The nonbank lenders have recently come under attack for the high interest they charge for collateral-free loans, as well as for their aggressive approach to collecting loans from debtors and debt-guarantors.

In recent years, many small, family-owned businesses have rushed to borrow shoko loans, after banks, struggling to cope with their bad loan mess, began curbing lending to less creditworthy borrowers.

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