The Giant Japanese Salamander runs to about five feet long, and about 55 pounds. It lives in high, splashy mountain streams with good circulation and cool water. It needs these conditions because it absorbs oxygen through its skin, and therefore requires a highly oxygenated environment.
There are many points of confluence between the Giant Japanese Salamander and the Kappa. The salamander has a broad, dish-shaped head, and it is very moist (being covered with slime). It's conceivable that it could be seen as a dish holding water, as in the legend of the Kappa. The salamander also nicely fits the description of "a fish with hands," as it does have creepy little hands and feet with very distinct toes. (Imagine Mickey Mouse's hands, made of slugs.)