Prime Minister Keizo Obuchi took a reluctant stance Tuesday on making public the results of ongoing regulatory inspections of the country's biggest banks.
The probes, currently being undertaken by the Financial Supervisory Agency with the help of the Bank of Japan, are aimed at clarifying the extent of the bad loans accumulated at the banks.
The move is part of efforts to see just how sound the nation's financial institutions are, and authorities are in the process of delving into the records of the major 19 financial institutions.
But Obuchi told the Lower House Budget Committee that making the results of the inspections public could pose problems because they would reflect the credit positions of borrowers. If the results were released, specific data regarding the business of individual borrowers would be made public against their will, the prime minister said. He added that businesses whose loans are questionable could be damaged.
The focal point of the checks is to calculate the amount of loans each bank has listed under its own standards as "category two" type loans, which require caution in collecting.
The lack of transparency regarding the way banks classify such gray-area loans has been criticized as a reason behind the general lack of confidence toward the nation's banking system.
Banks, however, have been reluctant to put their classification criteria under public scrutiny, saying different banks could classify the same borrower in different categories and that such figures hold little significance.
They also point to the fact that even banks in the United States do not disclose their categorization results.
Meanwhile, during the same budget committee session, FSA head Masaharu Hino vowed to set strict standards for banks' loan categorization.