Combined outstanding loans to small and midsize firms from the 15 banks that received public funds in March fell 715 billion yen short of estimates, according to bank reports released Friday.

Increasing loans to small and midsize firms, who have just shouldered the brunt of a recent lending crunch, was a condition for receiving the 7.5 trillion yen capital injection.

Officials at the Financial Reconstruction Commission said the shortfall, as of March 31, emerged after demand for loans fell due to sluggish corporate activity.

The nation's financial watchdog made the reports public after the banks submitted them at the end of June.

FRC officials said the management-revitalization plans were initiated in April, and that the March 31 figures should not be taken as a deviation from the plans.

But the estimates for March 31 were submitted on March 4 -- leading to fears that a 715-billion yen shortfall in such a short period could undermine the plan's credibility.

The submission of the reports was based on the Bank Recapitalization Law and marked the first indication since the capital infusion as to how well the 15 financial firms are carrying out their management-revitalization plans -- another condition in receiving the capital injections.

Eight of the 15 banks did not extend as many loans to small and midsize firms as they had previously estimated. Fuji Bank had the largest discrepancy, falling 555.9 billion yen short of its initial projection.

The banks pledged in March to increase loans to small and midsize firms by a total of 3 trillion yen during the year to March 2000.

FRC officials said the target remains in effect but is not legally binding.

If the banks deviate substantially from their plans, the Financial Supervisory Agency -- another watchdog under the FRC -- can order them to improve management.

The reports detail profits, capital adequacy ratios and restructuring achievements in terms of personnel cuts and salaries -- all as of March 31. Overall, the figures in the reports are not substantially different from earlier estimates, FRC officials claimed.