Ruling coalition legislators on Monday dropped a plan to ask a Softbank Corp.-led consortium to accept the removal of a bad-loan buyback clause from their sales contract for the nationalized Nippon Credit Bank, coalition officials said.

The team of legislators from the three ruling parties agreed that it would be difficult to secure the consortium's agreement for the contract amendment. The contract was concluded in June between the consortium and the government's Financial Reconstruction Commission, the officials said.

The clause obliges the government to buy back any outstanding NCB loans whose value falls by over 20 percent within three years from the time of the bank's sale.

The opposition camp has called the clause unfair and demanded its removal from the contract.

Some ruling coalition members later joined the chorus of political criticism that followed public outcry that was triggered when the FRC approved the contract terms on June 30.

The FRC, responding to the criticism, said Wednesday it will delay the bank's sale by about one month to make the public understand the necessity of the clause.

Softbank President Masayoshi Son suggested the same day that the sale would not proceed without the disputed clause.

Officials said the coalition team decided not to ask the consortium to drop the clause because failing to sell NCB might induce a revival of serious instability in the entire banking system. On Sunday, new FRC Chairman Hideyuki Aizawa told a news conference that a buyer for NCB may not be found without the clause in the sales contract.

The coalition's decision is likely to open the way for an NCB sale in September, they said.

The NCB was placed under government administration Dec. 13, 1998, after it faced bankruptcy under the weight of massive bad-loan losses.

The bad loan-buyback clause drew stinging public criticism after Shinsei Bank recently took advantage of a similar clause, obliging the government to buy its loans to major department store operator Sogo Co.

Shinsei, formerly the nationalized Long-Term Credit Bank of Japan, decided to sell back the loans after Sogo, saddled with 1.87 trillion yen in debts, asked Shinsei to waive claims on 97 billion yen of them.

The government on June 30 said it agreed to buy back the loans and comply with Sogo's request for loan forgiveness. The announcement stirred public outrage.

The ruling Liberal Democratic Party then intervened and forced Sogo to withdraw its request; Sogo filed for corporate rehabilitation July 12.

The coalition team also decided to continue considering an amendment to the financial-system revival law that would include clauses imposing strict conditions on government agreement to forgive debts of borrowers of nationalized banks whose loans it purchases, they added.