A plenary session of the Lower House on Tuesday approved a bill to regulate money-lending businesses being run by so-called daily usurers.
Current laws allow such moneylenders to charge annual interest rates as high as 109.5 percent.
While they are only allowed to extend loans to firms with no more than five employees, the reportedly forcible way in which they collect repayment has come under scrutiny both inside and outside the Diet.
The bill, a coordinated effort by the tripartite ruling coalition of the Liberal Democratic Party, New Komeito and New Conservative Party, will halve the maximum chargeable interest rate to 54.75 percent.
The bill is expected to be submitted at an Upper House plenary session by the end of the month. If it is passed, it will take effect Jan. 1.
The bill also requires the moneylenders to clearly explain they are daily usurers at their branch offices and on their documents.
The Democratic Party of Japan, the main opposition force, had earlier proposed a bill that would lower the maximum interest rate to 29.2 percent, the ceiling for the nation’s other moneylenders.
But the DPJ decided that supporting the coalition’s bill would be a faster way to act on such moneylenders.
The DPJ claims the number of daily usurers has been steadily increasing recently.