Japanese financial regulators ordered Aiful Corp, the country's biggest consumer lending firm, on Friday to suspend business at all of its 1,700 outlets for three days as punishment for coercive loan collection methods.
The sanction comes at a sensitive time for Japan's consumer loan firms, in which foreign investors have taken large stakes, as lawmakers and regulators weigh whether to lower the industry's 29 percent interest rate ceiling.
Aiful and other consumer lenders offer mostly unsecured personal loans at rates that are two to three times higher than those charged by banks for credit card loans. Critics say the rates are excessive and firms intimidate borrowers to collect on debts.
At a news conference, Aiful President Yoshitaka Fukuda apologised and said pressure to meet business targets may have prompted the illegal collection tactics, which included pressuring borrowers' family members to repay defaulted loans.
"We have hurt the industry's image badly," he said.
Fukuda will take a 30 percent pay cut for three months, while the pay of five other executives will be cut by 20 percent for the same period.
The Ministry of Finance's bureau in Kinki, western Japan, which oversees Kyoto-based Aiful and other consumer lenders headquartered in the region, ordered Aiful to halt business at its outlets nation-wide from May 8 to 10.
The bureau imposed longer suspensions of 20 to 25 days on five outlets cited specifically for using overly aggressive collection tactics and other violations. Customers will still be able to repay loans during the suspension period.
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