Revisions to the Banking Law to increase its punitive measures may be proposed by this fall’s extraordinary Diet session, the finance minister said June 3, as the scandal involving Dai-Ichi Kangyo Bank deepens day by day.
Minister Hiroshi Mitsuzuka told a morning news conference that he has instructed his officials to study the issue of changing the law so that more severe penalties will be levied against financial institutions that violate it. The issue surfaces as DKB, one of the nation’s top city banks, allegedly lent billions of yen to a former “sokaiya” corporate extortionist recently arrested on suspicion of illicit dealings with and payoffs from Nomura Securities Co.
It was also suspected that the bank gave false reports to the Finance Ministry during regular inspections and tried to cover up the existence of such dubious loans. “In light of the need for (financial) markets to be operated fairly, the issue must be dealt with severely,” Mitsuzuka said, adding that the revisions would probably be proposed as legislation submitted by lawmakers from the three parties supporting Prime Minister Ryutaro Hashimoto.
Currently, Article 63 of the law says a bank could be fined up to 500,000 yen for reporting falsely to the ministry. No details were provided regarding the stiffer penalties under consideration. The penal revisions to the law would be dealt with separately from other changes to key laws concerning financial institutions, Mitsuzuka said.