The Liberal Democratic Party said Tuesday it will review the legal limits of interest rates for commercial lending in order to rein in operators of high-interest “shoko” loan businesses.
The 40 percent limit under the Investment Law will be reviewed for a possible reduction, said Hideyuki Aizawa, head of the LDP’s committee on finance and banking systems.
The decision was made in a joint meeting of Aizawa’s committee and the finance division of the party’s policy research council.
Aizawa said that although the upper limits may be too high, they should not be set so low as to put the shoko lenders out of business.
Any legal revision will require a consensus in the tripartite coalition, he added.
While the Investment Law imposes penalties, the Interest Rate Restriction Law, which sets the upper limit at 20 percent, does not. As a result, shoko lenders, which provide loans to small and midsize companies, are effectively allowed to set rates up to 40 percent.
These lenders are under fire for their loan-collection practices, which are believed to sometimes border on extortion.
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