Social fund

It would be said that by reduction of cap of interest rate, money lenders must strengthen their examination of borrower’s capability for repayment. It is necessary for lender to conduct a suitable examination for borrower’s suitability of loan.As a result, most money lenders warn that more restriction of cap interest rate means more difficulty of loan. Therefore debtors who are refused their borrowing by lender are forced to borrow money from illegal lender. To prevent such kind of indebtedness, there is no way except to government fund prepared on no or low interest rate. To cope with this situation, government has to hurry to preserve and expand the public fund. To expand and enlarge the social fund is efficient is necessary for over multiple debtors to get relief from over indebtedness. Especially, it is quite important for the debtor who falls into lack of money because of inevitable reason; illness, discharge and so on. Iwate Consumer credit life cooperative association supplies the money up to ￡20,000 and 9.25 APR　for over-indebted borrower to be able to repay or liquidate his debt. The association operates it cooperated with rural administrative council, bar association and financial institutions.[1] However, the activity is not general in
Japan.
Tokyo metropolitan office starts to supply money up to 2 million yen.[2] The more funding by government is necessary for diligence for responsible lending by money lenders.

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[1] Mainich Shinbun: December 3, 2006.

[2] Jiji news: December 14, 2006-12-21