Prime Minister Ryutaro Hashimoto will soon urge the executives of Japan's major banks to overcome any reluctance to offer loans, said Mitsuo Horiuchi, minister for international trade and industry.

Horiuchi said Hashimoto expressed his intention when they discussed the issue after a Cabinet session Friday. Speaking at a news conference, the trade chief said the injection of public funds is an important first step, but will not correct the ongoing credit crunch alone. "The Finance Ministry must ensure that those banks will not hold back loans now that they have received people's tax money," he said.

In addition, Finance Minister Hikaru Matsunaga the same day vowed continued efforts to ease fears over the stability of the nation's financial system and correct, in particular, stringent lending by banks, calling it key to boosting economic confidence.

Speaking at a regular news conference, Matsunaga said it is imperative for the economy to secure Diet passage of the fiscal 1998 state budget and related tax revisions as swiftly as possible. The budget is still being debated in the Lower House; it is uncertain whether it can clear both chambers of the Diet by the April 1 start of the new fiscal year.

At the same time, Matsunaga said he feels concerns over the creditworthiness of the nation's financial sector have ebbed compared with November and December, when the public was rocked by the successive collapses of several financial firms.