The Democratic Party of Japan on Thursday submitted to the Lower House a bill to regulate moneylending businesses being run by so-called "daily usurers."
Under current law, such moneylenders can set their annual interest rates as high as 109.5 percent.
They can only lend money to firms with no more than five employees and the reportedly forcible way in which they extract repayments from small firms has come into question, both inside and outside of the Diet.
The DPJ bill proposes reducing the maximum interest rate that lenders are allowed to charge from the current 109.5 percent to 29.2 percent, which is the upper limit on interest rates for the nation's other moneylenders.
The DPJ said the number of such lenders has been increasing steadily in recent years, despite a decline in the total number of moneylenders.
The tripartite ruling coalition, which comprises the Liberal Democratic Party, Liberal Party and New Komeito, is considering submitting a similar bill to the Diet.
The DPJ maintains that it is willing to hold talks with the ruling coalition, as well as the Japanese Communist Party, which is also keen on the new law, so that they can jointly work on the issue.