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(MNI) Tokyo

Bank of Japan officials are on guard for signs of caution in bank lending around May when many smaller firms, especially those badly hit by virus-related restrictions, are due to repay loans as such signs will increase pressure on the BOJ to consider measures to support corporate financing, MNI understands.

Some 50-60% of smaller firms that borrowed under special lending facilities in the wake of the pandemic at zero interest and with no collateral will start repayment in May or soon after. While their loans are backed by credit guarantee associations, commercial banks are concerned that in-person businesses continue to face difficulty in ensuring cash flow or profits as quasi-emergency restrictions expand with rising new infections.

Slower lending and the subsequent downward pressure on financial institutions' profits could create the risk of a gradual pullback in financial intermediation, the BOJ has warned.

MNI Tokyo Bureau | +81 90-2175-0040 |
MNI Tokyo Bureau | +81 90-2175-0040 |

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