The ruling Liberal Democratic Party may recommend allowing Japan Post Holdings Co., the world's largest deposit holder, to lend money to cash-strapped companies and individuals hit by the global recession.

"We want to include that in our proposal to be compiled in late February," said Gen Nakatani, a Lower House lawmaker in charge of the LDP's team overseeing the bank's privatization. "The project team is studying it."

Japan Post, which had ¥179.1 trillion in deposits at the end of December, is currently unable to make corporate or consumer loans on its own. Regional banks oppose letting the former state-run postal system into the lending business, saying it would overwhelm their efforts.

Access to Japan Post's pool of funds could alleviate the credit squeeze. Prime Minister Taro Aso's government is encouraging banks to lend more to firms hit by production cuts at larger customers, including Toyota Motor Corp.

"Given the current situation, we have to consider" tapping Japan Post, Nakatani said. His team is also considering lifting the ¥10 million limit on deposits, he said.

The Nikkei newspaper earlier Thursday reported the LDP's intention, citing an unidentified party official.

Japan Post Bank President Yoshifumi Nishikawa has said he wants to offer loans to individuals. The company needs the permission of an independent advisory board and financial regulators before entering new businesses.

Tadashi Ogawa, head of the Regional Banks Association of Japan, has said approval shouldn't come while the government still controls Japan Post's assets.