The ruling Liberal Democratic Party decided Monday to allow the state-run Resolution and Collection Corp. to continue buying bad debt from banks for another three years, until the end of March 2004, LDP officials said.
The decision came at a joint meeting of a special LDP committee working on emergency economic measures and related subcommittees.
After obtaining consent from its two coalition partners, New Komeito and the New Conservative Party, the LDP will present a bill to the current Diet session to revise the Financial Revitalization Law to let the RCC continue to buy bad loans from banks, the officials said.
The RCC's debt-buying function expired at the end of March, but many banks want it to be extended to help them write off mountains of bad loans.
The plan to extend the RCC's debt-buying function was included in an emergency economic package announced last month by the government and the ruling coalition.