A transition period of about five years in introducing a lowered, single interest-rate ceiling for consumer loans is necessary to meet potential demands from customers who want to borrow money for a short period, Financial Services Agency chief Yuji Yamamoto reckons.
"The public may find it easier to understand if there is no transition period, but we need to make a decision based on reality," Yamamoto said in an interview this week.
The ruling Liberal Democratic Party decided earlier this month on a five-year transition period before imposing an interest rate cap of 20 percent. The cap will be lowered to 25.5 percent in the final two years of that period from the current 29.2 percent.