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Ban exorbitant rates of interest

Japanese Communist Party representative Daimon Mikishi in the House of Councilors Budget Committee meeting on March 15 pointed out that non-bank moneylenders are making enormous profits by imposing exorbitant rates of interest by taking advantage of the loopholes of the law, and demanded that the grey area allowing moneylenders to impose excessively high interest rates be removed.

Every year, more than 200,000 users of non-bank moneylenders' loans declare personal bankruptcy.

Daimon pointed out that major non-bank moneylenders such as Takefuji and Acom borrow money from major banks at interest rates of not more than 2 percent and lend money at more than 20 percent.

The Investment Deposit and Interest Rate Control Law prohibits moneylenders from taking an annual interest of more than 29.2 percent. Under the non-penal Interest Restriction Law, the upper limit of rates is between percent depending on the amount of the loan.

Interest rates exceeding the legal limits should logically be nullified. But the non-bank moneylenders take advantage of the law's loopholes that borrowers are free to opt for paying rates set in the grey area, and made their borrowers pay interest rates of up to 29 percent. Referring to the Supreme Court judgment in January that virtually prohibits interest rates in the grey area, Daimon urged the government to reduce the upper limits of the Investment Deposit and Interest Rate Control Law to that under the Interest Restriction Law.

Daimon also pointed out that most major banks are using non-bank moneylenders as subsidiaries and that banks grant loans to low-risk customers, while forcing non-bank lenders to deal with high risk customers. He said that this shows that major banks are in the loan-shark business.

Yosano Kaoru, minister in charge of financial, economic, and fiscal policy, said, "It is disgusting that usurers are running their advertisements on TV."

Speaking for the people calling for the exorbitant rates of interest to be reduced, Daimon called on the Diet to act in line with the Supreme Court decision.
- Akahata, March 16, 2006