The government will study the feasibility of increasing a fund to help struggling banks to ¥10 trillion from the current ¥2 trillion, economic and fiscal policy minister Kaoru Yosano said Sunday.
"The ¥2 trillion won't be enough. It could be around ¥10 trillion," he said on a political talk show.
The increase would be aimed at buffering the impact of the global crisis on the nation's financial institutions and curb turmoil in the banking system.
The government submitted a bill to the Diet on Friday to allow it to inject public money into banks and other financial institutions to shore up their capital bases and ease the credit crunch.
The government has allocated around ¥2 trillion for bank recapitalization in the budget through next March.
The new bill is designed to help small and midsize firms having difficulty borrowing money from banks, not to try to stabilize the entire financial system, government officials said.
But the bill, which was initially only to cover small regional banks, has been revised to cover megabanks as a preventive measure against the current crisis.
During a separate program on NHK earlier in the day, Naoto Kan, leader of the Democratic Party of Japan, said his party basically favors the bill but indicated it might vote no if the package covers such banks as Shinginko Tokyo, the ailing bank launched at the initiative of Tokyo Gov. Shintaro Ishihara.
The Tokyo Metropolitan Government has already pumped ¥40 billion in additional capital into the financially troubled regional bank.
"Taxpayers' money of Tokyo residents have been used for Shinginko Tokyo. If the tax money of the people (across the country ) will be used too, we have no choice but to discuss it (at the Diet)," Kan said.