The Financial Services Agency said Monday it will launch followup inspections targeting 167 large-lot borrowers in an effort to gauge how likely these firms are to repay their debts.

It will be one of the FSA’s core inspection drives during the year that began on July 1.

According to agency officials, the FSA will order banks to increase loan-loss reserves for any of the 167 clients if their earnings or balance sheets are found to have deteriorated when they close their books Sept. 30 for the fiscal first half.

The FSA also started inspecting five government-affiliated financial institutions Monday to determine whether any of their borrowers have fallen into financial trouble. The agency plans to finish auditing the Development Bank of Japan, the Japan Bank for International Cooperation and the others by June 30.

The FSA covered the 167 borrowers in its special audits in the year to June 30. It sought to assess whether major banks were strictly assessing the financial conditions of borrowers, following the abrupt bankruptcy of supermarket operator Mycal Corp. in September 2001.

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