Japan's continuing credit squeeze is turning the spotlight onto small-business loans from commercial moneylenders -- so-called "shoko" (commerce and industry) loans that carry extremely high interest rates because they require no collateral, only a third-party guarantee. To collect loans, the lenders reportedly use strong-arm methods that often come close to extortion.
The Metropolitan Police Department has arrested a former employee of Nichiei Co., the largest shoko lender headquartered in Kyoto, on suspicion of pressuring a guarantor by suggesting that he repay his debts by selling off his body parts.
Reports about such cases prompted the Financial Supervisory Agency to start investigating shoko lending practices. What must first be clarified is whether such cases of extortionate debt collection were isolated acts by desperate employees or part of an organized drive to recover unpaid loans.
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