The senior vice minister for financial services urged local finance bureaus around the country Thursday to encourage regional banks to take advantage of a capital infusion system for expanding loans to small firms.

"Smooth fund provision to small companies is one of financial institutions' key functions," Tatsuya Tanimoto was quoted as telling a meeting of local financial bureau chiefs. "We would like to see many financial institutions take advantage of the system."

The government late last year revised the financial function enhancement law to expand capital injections into banks to increase their lending capacity and prevent a credit crunch.

The Financial Services Agency convened Thursday's meeting to instruct local finance bureaus to promote the system.

Among regional financial institutions, Sapporo Hokuyo Holdings Inc. in Hokkaido and Minami Nippon Bank in Kagoshima Prefecture are considering receiving public capital injections.

Sapporo Hokuyo's main banking unit is North Pacific Bank.