BoJ to double loans to commercial lenders
TOKYO: The Bank of Japan said it will double the amount of loans it extends to commercial lenders at its next installment of a program to encourage investment in companies in growth areas, to meet increased demand.
The central bank will extend 998.3 billion yen ($11.9 billion) in a second installment of a 3-trillion yen facility it unveiled in April, it said in a statement in Tokyo today. Some 106 financial institutions are participating in the program, swelling from the 47 that participated in the first round, the central bank said.
The credit facility extends one-year loans to commercial lenders at 0.1 percent to encourage lending for projects that can induce demand and investment to help spur the country's economic growth and beat deflation. BOJ Governor Masaaki Shirakawa yesterday said that the program is encouraging more private lenders to set up their own funds to finance ventures in growth areas. BOJ policy makers have said boosting growth and increasing demand are crucial to ending price declines that have plagued the economy for more than a decade. The central bank's loans can be rolled over for up to four years.
The BOJ has said the loans should be used for projects including the development of energy and social infrastructure, environment protection and medical and nursing initiatives.
Lending to assist investment and businesses in the Asian region increased to 93.7 billion yen, rising more than seven times since the first offering, according to the bank. Funds will be extended to lenders on Dec. 7.
Asked if the central bank intends to increase the size of the program from the current 3 trillion yen, Shirakawa yesterday said the bank will watch the development of the program before making a decision. - PB News