The head of the Japanese Bankers Association denied during unsworn Diet testimony Tuesday that the nation’s top banks were using “opaque” lending practices to expand their lending to smaller businesses.

Katsuyuki Sugita, association chairman and president of Dai-Ichi Kangyo Bank, told the Lower House Finance Committee that the banks were not forcing firms to borrow in an effort to meet lending pledges outlined in management improvement plans, which were drawn up in return for receiving public fund injections.

“We are not forcing customers to borrow funds against their will,” Sugita told the committee, stressing that the lending figures were not artificially bloated.

Kiyoshi Ueda, an opposition lawmaker with the Democratic Party of Japan, questioned the existence of short-term loans “that were pushed onto clients toward the end of the fiscal year.”

“Were not such loans used so that the loan figures would meet those pledged (to the government?),” Ueda charged.

In response, Yoshiro Yamamoto, president of Fuji Bank and another unsworn witness in Tuesday’s committee session, said that while he was not aware of individual cases, he “never gave instructions to have loan figures match” pledged amounts.

Fifteen major banks received infusions of public money to shore up their capital base in March 1999. In return, they submitted management overhaul plans that included pledges to increase lending to small and medium-size enterprises. , which at the time had been suffering under the stringent lending practices of financial institutions.

Sugita has already indicated that the 15 banks most likely cleared their lending targets as of the end of March.

However, critics, including the DPJ, have charged that some aspects of the lending are unnatural, such as the sudden upswing in lending figures since around the end of last year.

They maintain that the lending targets were achieved with the help of loans that are to be repaid after a short time, as well as those extended to banks’ affiliates.

Last week, Financial Reconstruction Minister Sadakazu Tanigaki told the committee that the government will examine whether the 15 banks did indeed increase their lending to small firms.

He said he would like the banks to provide more data to the Financial Reconstruction Commission for a closer inspection of details.