TOKYO, July 6 (Reuters) – Japan’s banking minister on Tuesday rapped a local prefecture’s plan to ease tough new consumer lending regulations, saying that the rules should be enforced across the country and that no one area should be exempt.
Osaka prefecture, the business hub of western Japan, plans to create a special district where the new regulations for consumer lenders will be relaxed, aimed at helping individuals and small firms with financing as well as preventing an increase in the use of illegal money lenders.
Shares of Acom Co (8572.T) and other consumer lenders, which have been struggling for survival amid a cut in the rates they can charge as well as claims for reimbursement of past excess interest payments, jumped on news of the plan the previous day.
But Shozaburo Jimi, the banking minister, said such a move by Osaka would be unfair and go against the spirit of the new rules. [ID:nTOE66403R]
“It would be inappropriate to relax lending caps and other rules in some particular regions since laws should be applied equally in Japan,” he told a news conference.
A set of regulations that went into effect in June fixed the ceiling for interest rates the lenders can charge at 20 percent, down from 29.2 percent, and limited the amount an individual can borrow, in a fresh blow to the industry. [ID:nTOE65D02B]
The stricter regulations, designed to protect borrowers, have also raised concern that those who cannot get additional loans under the new rules might resort to illegal lenders.
Shares of consumer lenders fell on Tuesday after surging the previous day. Acom Co Ltd (8572.T) dropped 4.4 percent, after jumping 26 percent on Monday. Promise (8574.T) lost 4.7 percent after leaping 17 percent the day before.
The Osaka prefectural government is set to unveil details of the plan later on Tuesday. (Reporting by Noriyuki Hirata and Taiga Uranaka; Editing by Chris Gallagher)