An advisory panel at the Financial Services Agency will draw up by late August proposals on lowering the ceiling on interest rates on consumer loans and dealing with the problem of heavily indebted borrowers, agency officials said Thursday.

Amendments to the existing law based on the proposals are expected to be submitted during an extraordinary Diet session this fall or another session opening in January, they said.

At the panel meeting, which convened for the first time since April, Financial Services Minister Kaoru Yosano said there will be a problem if people become unable to borrow money because of excessive regulations.

"It would be advisable to eschew any drastic rule change," he said.

In April, the panel debated ambiguities in moneylenders' business practices, which are attributable to two sets of ceilings on maximum lending rates -- 29.2 percent per year under the Investment Deposit Law and 15 percent to 20 percent, depending on the amount of principal, under the Interest Rate Control Law.

At the time, the panel proposed the ceiling be lowered from 29.2 percent. The ruling bloc -- the Liberal Democratic Party and New Komeito -- also decided the rate gap should be abolished by bringing down the ceiling to around 15 percent to 20 percent.

The specifics about how to implement these proposals have yet to be decided, however, as several options are still being studied.

One calls for unifying the ceiling at 20 percent per year. Another recommends simplifying the rule on the ceiling rate that varies according to the amount of principal under the Interest Rate Control Law.

Another idea envisions an exception that would allow lenders to apply higher ceilings than the regular one to small-sum loans or business lending.