The House of Representatives approved at a plenary session Thursday a bill aimed at limiting Japanese banks' shareholdings and creating a stock-buying body designed to absorb a portion of such holdings.
The bill, expected to clear the House of Councilors before the end of the current Diet session on Dec. 7, is expected to be enacted into law in January, government officials said.
The new legislation, which is aimed at making banks less vulnerable to stock market fluctuations, will require banks to limit their shareholdings to an amount less than their primary capital, beginning in fiscal 2004.
Holdings beyond that amount may have to be unloaded by selling them to the planned stock-purchasing body.
In January, the stock-buying body is due to start operations, buying a portion of shares held by banks and forestalling any market disorder that may arise when banks begin unloading massive amounts of their shareholdings. Due to operate through the end of September 2006, it will have 2 trillion in government-guaranteed funds to buy shares.