The Cabinet agreed Friday on a bill for a legal revision that would facilitate the injection of public funds by the government into financial institutions damaged by the massive earthquake and tsunami in March.
The bill, subject to Diet deliberations, is designed to encourage commercial lenders to strengthen their capital base by using taxpayer money and deal with a possible surge in demand for cash, especially from companies operating in disaster-hit areas of northeastern Japan.
Unlike the existing law, the bill stipulates that the management of recipient institutions would not be held responsible for receiving public money to shore up their balance sheets. Among other preferential treatment, it would give the institutions a longer period to revamp their businesses while relaxing terms for the repayment of funds.