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Takefuji Corp. said Wednesday it now expects a group net loss of 481.3 billion yen for business 2006 — compared with its earlier forecast 333.8 billion yen loss — due to increased reserves set aside to meet an expected rise in borrowers’ claims for reimbursements in connection with gains it made from “gray-zone” interest rates.

Takefuji also said it expects to book a pretax loss of 163.8 billion yen for the business year that ended in March, a reversal from the 125.9 billion yen profit it forecast in January, because reserves set aside in the October-March period, which totaled 290.5 billion yen, will be recorded as an operating expense rather than an extraordinary loss in compliance with its auditing firm’s advice.

The revised earnings projection forecast operating revenues at 328.9 billion yen, down from 334.6 billion yen, Takefuji said.

Gray-zone rates fall between two separate legal cap rates for consumer loans. The Interest Rate Restrictions Law caps rates at 15 percent to 20 percent according to loan amounts, while the Investment Deposit and Interest Rate Law allows rates of up to 29.2 percent to be levied if borrowers consent to them in writing.

Consumer loan firms generally levy gray-zone rates. Since a Supreme Court ruling in January 2006 effectively invalidated those rates, demands from consumers for refunds because of the excessive gains made by lenders have increased.

On Wednesday, another major consumer lender Aiful Corp. said it expects a group net loss of 411.2 billion yen for the business year to March — far above its earlier forecast of a 185.5 billion yen loss.

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