The nation's financial services regulator is expected to open a special investigation into the banking industry's card loan business this month in response to criticism that increased lending is contributing to a rise in personal bankruptcies, sources said.
The Financial Services Agency will look into whether lenders, mainly major banks, abide by the rules set by the Japanese Bankers Association, because the outstanding balance of loans on bank cards continues to rise even after the self-imposed rules were compiled in March.
While consumer finance companies can lend only up to a third of a customers' annual income, banks can offer card loans regardless of income. Bank card loans let customers borrow money easily through ATMs without putting up collateral.