The House of Representatives approved an amendment at a plenary session Tuesday to give more scope to loan-collection companies.
The bill, which passed the Judicial Affairs Committee earlier in the day, was sent to the House of Councilors immediately and is expected to be enacted during the current Diet session, which ends late this month.
The revised legislation will allow private operators to collect loans from failed companies, financial institutions other than banks, and special-purpose companies. The current law excludes these operations.
The bill, part of the government’s emergency economic measures unveiled in April, is expected to help accelerate the disposal of bad loans held by financial institutions.
By the end of April, 48 firms had registered as loan collectors under the current law, which came into effect in 1999. They had handled some 19 trillion yen in loans by the end of last year, of which they had collected more than 810 billion yen.
The law allows private companies to collect loans on behalf of financial institutions, a task previously limited to lawyers.
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