Jiji Press TOKYO (Jiji Press) — The Japanese Bankers Association plans to urge its member banks shortly to tighten screenings of loan applicants in line with the growth in so-called card loan services that allow individuals to take out loans through automated teller machines without collateral, informed sources have said.
Specifically, the banks will be asked to thoroughly check applicants’ annual incomes by seeking the submissions of income certificates and confirm their total outstanding debts through credit research agencies, in order to avoid providing loans exceeding their repayment capacities, the sources said.
Banks’ revenue from corporate loan services has been dwindling on the back of drops in domestic interest rates reflecting the Bank of Japan’s monetary easing.
Meanwhile, their combined balance of card loans to individuals, carrying relatively high interest rates, stood at ¥5,437.7 billion at the end of 2016, up 70 percent from six years before.
The growth in card loans was partly blamed for a rebound in individuals’ bankruptcy filings in 2016.
The bankers association will also ask member banks to curb the use of a system in which they pay fees to nonbank moneylenders to have them repay loans on behalf of financially troubled individual borrowers, the sources said. Speech