The Diet passed a bill Wednesday that lowers the ceiling on consumer loan interest rates and bars moneylenders from taking out life insurance policies, with suicide coverage, on borrowers in an effort to keep people from falling too deeply into debt or killing themselves to repay their loans.
Under the revision, the maximum interest rate on consumer loans will fall to 20 percent from the present 29.2 percent by late 2009. In addition to the rate cut, it also tightens capital requirements for moneylenders and obliges them to limit loans to one-third borrowers' annual income.
According to the Financial Services Agency, some 2.3 million people, one out of six of those who use consumer lenders, owe money to five firms or more.