Debt collector handed license to speed up bad-loan disposal

The Financial Services Agency granted a trust services license Friday to Resolution and Collection Corp. to enable the state-run debt collector to speed up efforts to help banks dispose of bad loans, FSA officials said.

The move is in line with proposals put forward by the Council on Economic and Fiscal Policy, a key government panel chaired by Prime Minister Junichiro Koizumi, to reinforce the function of RCC.

With the new license, RCC will be entrusted with a portion of banks' nonperforming loan assets and use them to securitize loans and sell them to investors.

So far, RCC has been buying bad loans from banks. However, banks are often reluctant to sell the loans because RCC buys them at a substantial discount.

But with the new trust arrangement, both banks and RCC will have a wider range of options to tackle bad-debt problems, the FSA officials said.

RCC is expected to start trust service operations on Sept. 10. According to the officials, several banks have inquired about the new service.