Japan should create an independent body to inspect various types of financial institutions including those run by agriculture and labor bodies, Financial Services Minister Hakuo Yanagisawa said Sunday.
Speaking at a town meeting with residents of Mito, northeast of Tokyo, Yanagisawa was apparently trying to counter criticism that the Financial Services Agency would be unable to conduct in-depth inspections on the quality of banks' loans to potentially troubled borrowers because the FSA also supervises banks.
However, he later told a news conference that the government should for now avoid discussing his proposal to create such an inspection agency, as the country first faces the task of resolving the issue of nonperforming loans held by financial institutions.
The government should instead discuss the proposal from a medium- to long-term perspective after it gains public trust by obtaining results from the current financial institution inspection system, he said.
The FSA began the special inspections in October, targeting those borrowers whose stock prices have plunged or whose credit ratings have been downgraded sharply. It is aimed at prodding banks to make stricter assessments of their loan portfolios and accelerate efforts to dispose of bad loans.