A proposed moratorium on debt payments by struggling small companies won’t increase bad loans of Japanese banks, reports Bloomberg.
Speaking to Bloomberg, Financial Services Minister Shizuka Kamei says that lenders won’t be forced to boost provisions when borrowers postpone repayments of interest or principal. Kamei is also urging banks to extend more credit to small businesses after bankruptcies hit a six-year high in Japan.
“We’re going to get financial institutions to provide these firms with more loans,” Kamei told Bloomberg. “Banks won’t have to treat debt on which they provide a moratorium as bad.”
Quoting Kamei, Bloomberg says the moratorium, postponing repayment of principal and interest, will be extended to individuals as well as firms. It aims to give relief to companies with about 100 million yen ($1.1 million) or less in capital.