The Financial Services Agency will consider temporarily easing restrictions on regional banks’ investments in nonfinancial businesses as a measure to support small firms vital to local economies amid the coronavirus crisis, FSA chief Toshihide Endo told Jiji Press on Thursday.

The Financial System Council, which advises the prime minister, is set to discuss a necessary law revision.

Investments by regional banks in nonfinancial businesses are currently limited to between 5 percent and 15 percent in principle in order to prevent the lenders from becoming financially unstable due to losses from noncore operations.

“What is needed now is capital participation, not loans that must be repaid,” regarding small businesses hit hard by the epidemic, Endo said during an interview, adding that there is a need to review the current rules.

The government is expected to submit to the ongoing regular session of the Diet a law amendment for increasing investments by a public-private fund called Regional Economy Vitalization Corp. of Japan, or REVIC.

“If there is a need to inject capital into small businesses that are vital for local economies, regional banks, second-tier regional banks, shinkin banks and shinyo kumiai credit cooperatives must step in,” Endo said.

Private financial institutions should actively support local businesses through not only loans but also investments, in cooperation with REVIC, he stressed.

“We must think about how we can implement something that will take the place of onsite inspections,” he said of the FSA’s supervisory functions amid the coronavirus crisis. He said that the agency will explore ways to inspect regional banks while avoiding contact with staff members.

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