Mizuho Bank has begun divulging its in-house interest-rate guidelines to corporate borrowers in the hope of persuading them to pay higher interest rates, Mizuho officials said Wednesday.

What the bank terms "interest guidelines" call for higher rates on borrowers whose creditworthiness is ranked at relatively low levels, the officials said.

It assigned 15 ratings to all its corporate borrowers in April, when it was founded along with Mizuho Corporate Bank through the reorganization of member lenders of the Mizuho Financial Group on April 1.

The 15 grades were based on Mizuho Bank's assessment of the possibility of each borrower defaulting on debts and in rough proportion to the duration of the maturity period of each loan, the officials said.

With these grades, Mizuho Bank plans to negotiate with a range of borrowers, especially those classified as "borrowers under close observation" as well as certain "sound borrowers" that have been given relatively low grades.

The move follows a similar move by Sumitomo Mitsui Banking Corp. earlier this year and is a strategy pioneered in Japan by Shinsei Bank.

Basing interest rates on risk assessment is considered essential in much of the rest of the world, and the shift by Mizuho Bank, one of the two key arms of Mizuho Holdings Inc., the world's largest bank in terms of assets at 151.3 trillion yen, may hasten the domestic trend.

Japan's tiny margins -- the difference between interest rates paid to depositors and those paid by borrowers -- have long been criticized as a major obstacle keeping banks from posting healthy operating profits and effectively dealing with their mountains of bad loans.

The Mizuho Financial Group aims to add 0.2 percentage point to the group's average lending margin on the strength of the new disclosure strategy, the officials said.

In parallel with the policy, the group plans to present to borrowers various proposals that could help improve their financial condition and thereby cut interest rates it charges them.

The group also plans to step up efforts to provide business information that could be used to help borrowers push up sales, they said.

UFJ Bank, a key arm of UFJ Holdings Inc., began to disclose in April its own internal interest-setting guidelines to some 5,000 main borrowers. It began divulging them to all borrowers in July.

UFJ Bank President Masashi Teranishi said, "Our borrowers are highly interested in knowing" the standards by which UFJ assigns credit ratings.