The gap between major banks and the Financial Services Agency in their estimates of the banks' risky and bad loans has narrowed, FSA data showed Tuesday.

The FSA's inspections of 12 major banks between November 2001 and May this year showed their bad loans and loans requiring careful watch stood at 43.73 trillion yen, 10.1 percent higher than the banks' self-assessed amount of 39.72 trillion yen.

The FSA's audits of 15 major banks, which later merged into 12 banks, conducted from April 2000 to November 2001 showed that such loans totaled 47.02 trillion yen, 35.9 percent higher than the 34.61 trillion yen in the banks' self assessment.

An FSA official said the major banks apparently became stricter about assessing their loans after the FSA launched the financial revitalization program in October 2002.

"We hope banks will continue efforts to strictly assess loan assets so as to narrow the gaps," he said.

In a similar development, the gap between the 12 major banks and the FSA in the estimates of the banks' credit costs also narrowed between the two previous periods, according to the FSA.

The FSA's audits of the 12 banks conducted during the second period showed that the banks set aside credit costs -- a combined amount of direct write-offs of bad loans and loan-loss reserves -- worth 14.71 trillion yen, 14.2 percent higher than the banks' self-assessed amount of 12.88 trillion yen.

The percentage was sharply lower than the previous period's 47.1 percent. It comes even lower to 8.7 percent for the four banks in the current inspections.

The FSA said it disclosed information on gaps in loan assessment between it and major banks as stipulated in the financial revitalization program.

The agency will release such data on a regular basis and urge banks to narrow the gaps if their records are far higher than those of others.