Nov. 11 (Bloomberg) -- Finland should ban paying out loans received via text message in the middle of the night to curb irresponsible borrowing, the Justice Ministry said.

SMS loans applied for after 11 p.m. shouldn't be paid before 7 a.m., a Justice Ministry working group said in a statement today. Text message lending started in Finland three years ago and has led to increased indebtedness among users of the service in the Nordic nation.

To get a loan, Finns currently send a text message containing the amount requested, their address, personal identity number and bank account number. The lender checks an online credit database, transferring the cash if the details check out and the applicant has a clean credit record. No security is required and loans can be taken out at any time.

Under the proposal, lenders would also be required to include the annual interest rate of the loan in their marketing, and identify applicants using secure procedures, such as web bank logins, the working group said. The government must now decide whether to send the legislation to the parliament for approval.

The average amount of a text message loan during the second quarter was 170 euros and was paid back in 28 days, according to Statistics Finland data. The number of court orders to repay text message loan debt rose 8.7 percent to more than 113,000 in the first nine months of the year, Suomen Asiakastieto Oy, a company that maintains Finland's credit data register, said last month.

To contact the reporter on this story: Kati Pohjanpalo in Helsinki at kpohjanpalo@bloomberg.net

Last Updated: November 11, 2008 06:11 EST