RIGA, July 16 (Xinhua) -- The restrictions the Latvian government is planning to put on the companies providing the so-called payday loans can play in the hands of illegal lenders, the Alternative Financial Services Association of Latvia warned on Monday.

The association's head Gints Aboltins said on public radio that the government's plan to put caps on interest rates and oblige payday loan providers to thoroughly check each client's credit worthiness could eventually result in the flourishing of illegal lending businesses.

According to the association's information, the problem of illegal lending is already quite serious in the Baltic country. A poll conducted from July 3 to 10 by Latvia's SKDS research agency showed that 31 percent of the population have been receiving offers from illegal lenders.

According to the survey, 16 percent of respondents have been receiving such offers weekly, 8 percent monthly, 4 percent once in half a year and 3 percent once in a year. Most of the surveyed people, or 67 percent, had received such lending offers by email. Illegal lenders also offer their services through advertisements, by telephone and on foreign or local websites operating in Latvia without the necessary license.

The Latvian Consumer Rights Protection Center has found out that only 36 percent of the people who take payday loans are actually able to pay them off on time.

To deal with the problem, the Latvian government is planning several restrictions to curb reckless lending. Banks and other credit institutions, for instance, could be obliged to report on their clients' outstanding debts. Restrictions have also been proposed on payday loan adverts and on the interest rates, which the nonbank lenders would be required to lower to 25 percent per year or 0.07 percent per day.