The ruling Liberal Democratic Party is poised to drop a proposal for a temporarily higher ceiling on consumer loan rates in a bill aimed at lowering interest rate caps, party sources said Tuesday.

The LDP had planned to allow a higher ceiling on small, short-term loans to ensure the continued flow of credit to consumers, but the plan has come under fire from both the opposition camp and the LDP's coalition partner, New Komeito, for being too easy on moneylenders.

The LDP will also withdraw a proposal to make larger loans subject to higher interest ceilings, a move that also would have favored moneylenders, the sources said.