The banking industry federation decided Tuesday that from this fiscal year, all member banks will need to disclose information about their bad loans according to stricter standards, in line with those of the United States.
Loans that are three or more months overdue will be filed into a new category, according to the Federation of Bankers Associations of Japan (Zenginkyo). The rules apply to about 150 domestic banks, including major, regional, trust and long-term credit banks.
Currently there is no category for loans under six months overdue. Zenginkyo also expanded the category of loans for which a bank has relaxed various conditions -- including the granting of a grace period for principal repayment -- as a way to help reconstruct borrower firms.
The member banks must adopt new standards for their closure of accounts by the close of the fiscal year, which ends March 31. The figures will be released in May. Under the new rules of the Securities and Exchange Commission, a U.S. federal agency, banks must disclose their risk loans in three categories -- nonaccrual, past due 90 days or more, and restructured loans. Zenginkyo's expanded standards correspond to these American categories, officials said.