The chairman of the Japanese Bankers Association (Zenginkyo) on Tuesday expressed reservations over fully protecting money deposited into accounts for business transactions under a new banking safety net to be introduced in April 2001.

Katsuyuki Sugita, concurrently president of Dai-Ichi Kangyo Bank, told a regular news conference that the full protection of such funds would go against the ideal of creating a cost-efficient safety net.

Under current rules, the government guarantees a 100 percent refund of bank deposits when a bank goes bankrupt. But starting April 2001, the government plans to limit the refunds to 10 million yen per depositor.

An advisory panel to the finance minister is now debating what kind of new safety net should be put in place after April 2001, such as what types of funds should be covered.

The funds in question are held by corporations in checking accounts for settlement purposes. Experts are divided over whether to fully protect such funds in the new scheme.

Also at the news conference, Sugita, whose bank in August announced a full integration with the Industrial Bank of Japan and Fuji Bank, supported the IBJ's wish to continue issuing "kinyu-sai" bank debentures after the three banks' consolidation.

The government has allowed only seven financial institutions, including the IBJ, to issue such debentures.

Funds collected through "kinyu-sai" debentures have financed large private-sector projects, contributing to the nation's postwar industrial growth.

But the need for keeping intact the kinyu-sai system has recently come under question. Some experts argue that the practice hampers fair competition among banks and should be scrapped.

The JBA also announced that the association's board of directors decided to elect Yoshifumi Nishikawa, president of Sumitomo Bank, as the chairman of the industry group next April.