TOKYO: Japan’s financial regulator said lending restrictions on Aiful Corp. and other consumer finance companies will take effect in June as planned, damping speculation that stricter rules will be delayed.

The Financial Services Agency may consider changes to rules for implementing a law that puts a ceiling on how much individuals can borrow, said Kenji Tamura, the third-ranking political appointee at the regulator. The law also calls for a 20 % cap on interest rates.

“We’re working on the assumption that the law will be fully implemented,” Tamura, 41, said in an interview in Tokyo yesterday. “Postponing the lending cap would require a change to the law, and that’s not under consideration.”

Promise Co., Acom Co. and Aiful, Japan’s three largest consumer lenders by assets, fell in Tokyo trading after Tamura’s remarks. The companies’ shares had jumped more than 50 % in the past month amid speculation the government may relax legislation to revive an industry hobbled by more than 4.4 trillion yen ($48 billion) in losses since a 2006 crackdown on lending practices.

“Many investors believe that a relaxation in the rules will mean a big change and move the market,” said Wataru Ohtsuka, a Tokyo-based analyst at Nomura Securities Co. “It is difficult to assess the impact any relaxation of rules may have for the four big consumer lenders, but it won’t be so big.”

Lenders Fall

Promise dropped 9.7 % at the close in Tokyo, the biggest decline since Nov. 18, and Takefuji Corp. slumped 7.8 %. Acom fell 5.3 % and Aiful, which staved off bankruptcy last month by winning creditor support for delaying debt payments, lost 2.8 %. An index tracking consumer finance companies fell 3.2 %, the most since Nov 24.

Legislators in December 2006 gave consumer lenders three and a half years to cap rates and to limit each borrower’s outstanding debt to no more than a third of their annual income. Lenders had previously charged as much as 29.2 % interest.

Tamura said one area where rules could be relaxed is making it easier for owners of small companies to get around loan caps, citing the need to address funding difficulties in a stagnant economy. Another is making it easier for housewives to borrow without their spouses’ consent, he said.

“Some small companies and people starting up businesses, who can’t borrow from banks, do use consumer finance companies to some extent,” Tamura said. “There is also data showing individuals use the lenders for emergency needs such as hospital and school entry fees.”

‘50-50 Chance’

The regulator said Nov. 13 it would set up a project team to examine possible changes to how new consumer-lending laws should be implemented, as mandated by the 2006 legislation. Tamura, one of five members of the team, was given responsibility for holding hearings on enforcement.

Tamura last month submitted a report on the hearings to Kouhei Ohtsuka, deputy minister at the agency. Tamura said he would like the project team to begin discussions as early as this month on the need for revisions to ordinances. There is a “50-50 chance” that changes will be made, he said.

The project team aims to make final recommendations two to three months before the law takes effect on June 18, said Tamura.

Shizuka Kamei, Japan’s financial services minister, said at a press conference today he hadn’t received the project team’s report. While there is strong demand for loans, the “current circumstances” don’t warrant changing the legislation, he said.