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A new task force to monitor banks’ progress in disposing of their sour loans will be set up within the Financial Services Agency by the end of March, it was learned Sunday.

The proposal is included in a package of specific measures — aimed at speeding up bad-loan disposal and reviving the financial sector — that is to be announced by the government by the end of the month.

Sources said that in addition to the new task force, the package will recommend that the Financial System Council discuss whether to draw up new legislation to pave the way for the injection of public funds into banks.

The package will fill in the holes left when the government released on Oct. 30 a set of measures on accelerating nonperforming-loan disposal and industrial revival.

One of the sticking points at the time was the timetable for revising tax-effective accounting rules in a way that would, from the banks’ point of view, reduce their capital base. As a result, the October package did not specify when such revisions might be introduced.

The specific steps to be outlined later this month will not include a timeline for this either, according to the sources, but they will incorporate demands for swift implementation and discussions on the issues raised in the October package.

The sources added that the banks will most likely be forced to step up the disposal of dud loans in the current business year to March 31.

The proposed task force will be comprised of experts with practical knowledge of financial affairs. It will monitor banks’ management as well as progress in their restructuring efforts, according to the sources.

The government intends to increase its influence in the management of banks that fall short of capital or are in dire straits through such means as injecting public money into them. The task force will report its findings on the operations of banks to the financial services minister.

Under current laws, the injection of public money is possible when the government recognizes an impending “state of financial crisis.”

The proposals are to say the Financial System Council should discuss — with a conclusion to be reached by March — whether a new law is necessary to swiftly inject public funds into banks as a preventive measure.

But even if a new law is deemed necessary, it is unlikely that there will be enough time to submit the legislation to the regular Diet session that begins in January, the sources said.

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