It appears that small-business banking in Japan is about to enter a new era. In May, the Tokyo metropolitan government unveiled a plan to create a new bank to serve smaller businesses. Now, members of the Japan Junior Chamber are pushing a similar plan. In August, they applied for permission from the Financial Services Agency to set up the "Japan Promotion Bank." If everything goes well, the bank will get a preliminary business license later this year and open for business next April.

These moves reflect dissatisfaction among small and midsize companies that are finding it difficult to borrow money from large banks struggling to clean up bad loans. The planned banks may have their own problems, but the need now is to start them up as soon as possible and pump some fresh air into the banking world.

According to the plan, the new bank, to be capitalized at 2 billion yen to 3 billion yen, will have its head office near Tokyo Station. It will not operate branches and serve small corporate clients only. Loan applications will be handled quickly, since no third-party guarantee or real-estate collateral will be required. Time deposits will be accepted only in amounts exceeding specified minimums, but they will carry higher interest rates than prevailing rates. The bank will not take demand deposits, nor will it provide settlement services.