Having returned to head the Financial Reconstruction Commission, Hakuo Yanagisawa on Wednesday emphatically ruled out the possibility of an extension to a controversial payoff plan.

One day into his new job, the FRC chairman said the new plan, which limits the maximum guarantee any individual depositor can claim to 10 million yen in the event that a bank fails, will be introduced in April 2002 as scheduled.

The plan, which had been originally set for April 2001 but has been postponed by a year, is expected to hurt banks with shaky foundations from next year as people become more cautious about opening one-year term-deposit accounts.

"A second extension is unthinkable," Yanagisawa said during an interview. "I want to ask for understanding on the need (for banks and depositors) to take responsibility for themselves."

When Yanagisawa was replaced in October 1999 as the FRC chief, foreign analysts lamented his departure and predicted a regression in Japan's financial reform process.

Known as a tough and blunt regulator, the FRC's first head oversaw the sale of the Long-Term Credit Bank of Japan, demanded that banks disclose more of their problem debts and raised the credibility of the commission as an independent entity from the Finance Ministry.

On Wednesday, however, Yanagisawa uncharacteristically shied away from criticizing his predecessor, Hideyuki Aizawa -- whom he called "his respected senior" during his days at the Finance Ministry -- and his proposal to lower rates guaranteed to life insurance policyholders to lighten some of the burden on the industry.

The life insurance industry has seen four failures this year.

Yanagisawa adopted a diplomatic line, saying he was not sufficiently informed about the details of the issue to state his position on it.

He said he was in the process of balancing different arguments, including whether the proposal would violate the Constitution, how the prolonged adoption of low-interest rates are affecting the real economy in general and the concerns of policyholders.

At the same time, however, he said, "It is the business of insurance companies to take on risk. To say that (life insurance companies) cannot take on risks and to (allow them to) change their contracts would, in a way, be a negation of what the insurance industry stands for."

Yanagisawa will act as the state minister in charge of financial affairs when the FRC merges with the Financial Services Agency in January.

In order to bolster the stability of the financial sector, Yanagisawa said the issues that remain include the consolidation of regional banks and coaxing a higher degree of fiscal health into the nation's trust banks and unions.

Yanagisawa had said earlier that he was painfully aware of the international scrutiny he was under to get Japan's financial sector back on its feet.

"A foreign economist once told me, 'Forget Macro,' " he said. "What is important is the accumulation of individual decisions."