Bank loans to small businesses decline by 45 trillion yen in four years

"Major banks have taken tax money while refusing to lend money to small- and medium-sized businesses. This is absolutely unacceptable," stated Sasaki Kensho of the Japanese Communist Party.

Sasaki in the Lower House Budget Committee meeting on January 24 revealed that banks are increasingly reluctant to lend money to small- and medium-sized businesses.

He said that small producers and traders are hard hit by the government policy of early write-offs of bad loans held by banks.

To show how serious the hardsips of smaller businesses are, Sasaki read out to the committee a suicide note left by a small firm president after arranging that his company's debts be repaid with his life insurance. The note read, "I did everything in my power, but I see no other way out."

Sasaki pointed out that major banks' loans to small- and medium-sized businesses declined by 45 trillion yen in the four and half years from March 1997 to September 2001, while money used for helping large corporations increased by seven-trillion yen.

He said that banks which have accepted public funds to improve their capital position are particularly reluctant to grant loans to smaller businesses without regard to their social obligation to increase their loans to such businesses.
Yanagisawa Hakuo, minister in charge of financial services, replied that the free market economy cannot ask the banks to abide by their plans. Sasaki said that the cabinet must withdraw its bad loan write-off policy and do its utmost to be strict about banks' impartiality in granting loans.

Insisting that writing off bad loans held by banks is necessary to improve bank management, Prime Minister Koizumi Jun'ichiro virtually accepted the squeeze on loans for small businesses. (end)