Nov. 2 (Bloomberg) -- Takefuji Corp., Japan’s fourth- largest consumer credit company by assets, led non-bank lenders higher in Tokyo after a report that the government may soften plans to cap interest charges and loan volumes.

Takefuji rose by its daily limit of 80 yen, or 23 percent, to 427 yen at the 3 p.m. close of trading on the Tokyo Stock Exchange. It was the biggest gain since the shares began trading Dec. 3, 1998. Aiful Corp. rose 17 percent, while Promise Co. and Acom Co., Japan’s largest consumer lender by market value, both rose by their daily limit, gaining 17 percent.

Japan’s newly elected government intends to set up a group to examine legislation drafted by the former administration before the law comes into effect mid next year, said Motoyuki Yufu, a spokesman for Japan’s Financial Services Agency.

“This would be a 180 degree policy change by authorities,” said Wataru Ohtsuka, a Tokyo-based analyst at Nomura Securities Co. “It would be a positive for the industry but we need to see the details of the discussions.”

The Nikkei newspaper reported on Nov. 1 that Japan may back away from tightening regulations on credit providers to ease fund-raising strains on the self-employed. The government may ease restrictions that would cap interest charges by consumer finance companies at 20 percent and limit total unsecured borrowing to a third of annual income, the report said.

‘Good News for Aiful’

“The government seems now to be moving in the direction of trying to manage the damage caused by new lending regulation,” said Kristine Li, a Singapore-based credit analyst at Royal Bank of Scotland Plc. “This would be good news for Aiful and other consumer finance companies if it’s true.”

Yoshimichi Yamada, a spokesman for Acom in Tokyo, said he couldn’t comment on an unsubstantiated report, as did Risa Matsumura, a spokeswoman for Promise. Kentaro Itai, a spokesman for Takefuji and Fukuichiro Funabiki, a spokesman for Aiful, were not immediately available for comment.

Japan’s consumer credit companies have lost 2.4 trillion yen in interest repayments and related losses in the last three years to March, in addition to 2 trillion yen in loan loss provisions, according to Japan Financial Services Association last month.

Lopro Corp., a lender to small businesses, filed for bankruptcy protection today with accumulated liabilities of 21.9 billion yen. Financial Services Minister Shizuka Kamei submitted legislation to parliament Oct. 30 to help small businesses reschedule bank loans to avoid more bankruptcies.

Aiful said in September it plans to cut as many as 2,000 jobs through early retirement, and is asking creditors to reschedule loan repayments after a government crackdown on interest charges. The Topix index tracking 23 non-bank credit firms was one of three groups in the 33-group benchmark to gain today, climbing 5.8 percent.

Half of all borrowers at consumer lenders could be rejected for additional loans if the regulations take effect without change, the Japan Financial Services Association said Oct. 26.

The number of registered consumer lenders fell to 4,909 firms as of the end of September from 14,236 in March 2006, data from the Financial Services Agency last month shows.

To contact the reporter on this story: Finbarr Flynn in Tokyo at fflynn3@bloomberg.net

Last Updated: November 2, 2009 01:34 EST