Stricter laws governing Japanese consumer finance companies may push borrowers to run up high credit card debts, warned the Japan Credit Card Association.

While legislation taking effect June 18 prohibits consumer lenders and credit card companies from offering new loans to borrowers with loans in excess of one-third of their annual income, they may increase debts via agreements with companies that exchange cash for items bought on cards, Sohei Sasaki, the trade group's chairman, said in an interview Thursday.

Sasaki, who is also the president of Mitsubishi UFJ Nicos Co., a credit card unit of Japan's largest bank, Mitsubishi UFJ Financial Group Inc., said that in order to ease repayments his company is allowing customers to lower monthly payments to $11, plus interest, from $109.13.

"Card companies could be left with an increase in heavily indebted borrowers," Sasaki said. "Even if customers obtain cash for the time being, the balance will remain on the card."

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