Principal Terms and Conditions for the Fund-Provisioning Measure to Support Strengthening the Foundations for Economic Growth Conducted through the Loan Support Program
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June 15, 2010 |
| Revision: |
March 13, 2012 |
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December 20, 2012 |
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February 18, 2014 |
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March 11, 2014 |
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March 17, 2015 |
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January 29, 2016 |
1. Purpose
The terms and conditions prescribe the principles for the Bank of Japan's fund-provisioning measure to support private financial institutions' efforts in strengthening the foundations for economic growth while ensuring smooth money market operations conducted through the Loan Support Program set forth in the "Principal Terms and Conditions for the Loan Support Program" (Policy Board Decision on December 20, 2012).
2. Location of Operation
The Bank's Head Office (Operations Department) or its branches.
3. Eligible Counterparties
Eligible counterparties shall, pursuant to the Bank's relevant rules, be selected from institutions satisfying one of the eligibility criteria listed below; however, the Resolution and Collection Corporation, bridge banks (as defined in Article 2, Paragraph 13 of the Deposit Insurance Act [Act No. 34, 1971]), and specified bridge financial institutions (as defined in Article 126-34, Paragraph 3, Clause 5 of the Act) shall be excluded from these institutions.
| (1) |
financial institutions (as defined in Article 37, Paragraph 1 of the Bank of Japan Act [Act No. 89, 1997]) |
| (2) |
financial instruments firms (as defined in Article 10, Paragraph 1, Clause 2 of the Order for Enforcement of the Bank of Japan Act [Order No. 385, 1997]) that conduct the type I financial instruments business (as defined in Article 28, Paragraph 1 of the Financial Instruments and Exchange Act [Act No. 25, 1948]) |
| (3) |
securities finance companies (as defined in Article 10, Paragraph 1, Clause 3 of the Order) |
| (4) |
tanshi companies (as defined in Article 10, Paragraph 1, Clause 4 of the Order) |
| (5) |
the Development Bank of Japan Inc. |
4. Form of Loans
Loans shall be provided in the form of electronic lending.
5. Duration of Loans
The duration of loans to financial institutions shall be set as within four years. Nevertheless, the duration of rollover loans pursuant to 7. (2) shall be set as within one year.
6. Loan Rates and Collection of Interest
| (1) |
The interest rate on loans shall be as follows. |
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| (a) | The interest rate on loans shall be 0.1 percent per annum. |
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| (b) | Notwithstanding (a), the interest rate on rollover loans pursuant to 7.(2) shall be determined by the method applied as of the date of first disbursement of respective loans. However, the interest rate on such loans shall be 0.1 percent per annum for the time being. |
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| (2) |
The interest on a loan shall be calculated based on the rate determined by the method described in (1) for the number of days (i.e., interval) specified by the Bank during the duration of the loan, and the interest shall be collected on the last day of each interval. |
7. Date of Each Loan Disbursement and Rollover of Loans
| (1) |
The date of each loan disbursement shall be specified by the Bank. No loan shall be disbursed on or after July 1, 2017 except for the rollover of loans as described in (2). |
| (2) |
If the counterparty requests, the Bank shall allow loans to be rolled over on the maturity date within the maximum amount of loan prescribed in 9. However, the overall duration of loans -- adding the duration at the first disbursement and the ones at subsequent rollovers -- shall not exceed 4 years. |
8. Amount of Each Loan
The amount extended to each counterparty for each loan is the amount the counterparty wishes to borrow, provided that it shall not exceed the maximum amount of loan prescribed in 9. and the unused value of the total standing pool of eligible collateral pledged to the Bank.
9. Maximum Amount of Loans, etc.
(1) The maximum amount of loans to each counterparty
The total amount of loans to each counterparty shall not exceed 2 trillion yen.
(2) The maximum amount of loan to each counterparty at each loan disbursement
The maximum amount of loan to each counterparty at each loan disbursement shall be the amount of new lending or investment with a maturity of one year or more, carried out within a certain period specified by the Bank, under the plan to support strengthening the foundation for economic growth described in 12. submitted to the Bank. However, if the counterparty wishes to rollover a loan, the maximum amount of rollover loan shall be the smaller of the following two: (i) the outstanding amount of lending or investment with a residual maturity of one year or more out of the outstanding amount of lending or investment at the first disbursement, which was the basis for calculating the maximum amount of loan, or (ii) the amount of the existing loan to be rolled over.
10. Prepayment
| (1) |
The counterparty may prepay all or a part of the outstanding amount of loans initially disbursed on or after April 1, 2014, on an annual basis, on a day specified by the Bank. |
| (2) |
In case the amount in (a) falls short of the amount in (b) for loans initially disbursed on or after April 1, 2014 on a day specified by the Bank, the counterparty shall repay the amount equivalent to the shortfall, pursuant to the Bank's relevant rules. |
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| (a) | the outstanding amount of lending or investment with a residual maturity of one year or more out of the outstanding amount of lending or investment at the first disbursement, which was the basis for calculating the maximum amount of loan. |
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| (b) | the outstanding amount of loan. |
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11. Deadline for New Applications for Loans
The period for calculating the amount of loans prescribed in 9.(2) shall end on or before March 31, 2017.
12. The Plan to Support Strengthening the Foundation for Economic Growth
The plan shall be formulated by each counterparty for lending or investment, and satisfy the conditions set forth in either Annex 1, Annex 2, or both.
13. Collateral
Supplementary Provision
These terms and conditions shall become effective today and shall be valid through June 30, 2021.
Annex 1 : Conditions that Plans to Support Strengthening the Foundations for Economic Growth Shall Meet
| 1. |
The plan should use funds received, either borrowed or invested from financial institutions, for a period of no less than one year to support strengthening the foundation for economic growth, for example, in one of the areas listed from (1) to (18) in the following, or to borrowers or entities in which financial institutions invest listed in (19). |
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| (1) |
Research and development |
| (2) |
Setting up a new business |
| (3) |
Business reorganization |
| (4) |
Investment and business deployment in Asian and other countries |
| (5) |
Science and technology research at universities and research institutions |
| (6) |
Development and upgrading of social infrastructure |
| (7) |
Environment and energy business |
| (8) |
Business for securing and developing natural resources |
| (9) |
Medical, nursing care, and other health-related business |
| (10) |
Business serving the needs of senior citizens |
| (11) |
Business in the content creation industry |
| (12) |
Tourism business |
| (13) |
Regional and urban revitalization business |
| (14) |
Agriculture, forestry, and fisheries business; Business linking agriculture, commerce, and industry |
| (15) |
Business which supports the creation of housing stock |
| (16) |
Disaster prevention business |
| (17) |
Employment support and human resources development business |
| (18) |
Childcare services business |
| (19) |
Entities proactively investing in physical and human capital, including those who are eligible for special legislative provisions for tax (excluding the provisions only for specific businesses), which require acquisition, etc. of equipment used for their businesses or experimental research, or require increases in employees' salary |
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| 2. |
Borrowers or entities in which financial institutions invest shall be either domestic residents (excluding the government, municipal governments, institutions holding a current account at the Bank, and financial institutions [as defined in Article 37, Paragraph 1 of the Bank of Japan Act] without a current account at the Bank) or foreign corporations with a business establishment in Japan and carrying out business in the areas identified as contributing to strengthening the foundations for economic growth such as those listed in 1. |
| 3. |
The Bank shall be under no obligation to provide funds where, for whatever reasons, it considers this to be inappropriate. |
Annex 2 : Conditions that Plans to Support Strengthening the Foundations for Japan's Economic Growth Shall Meet (Lendings and Investments to Consolidated Foreign Companies of Domestic Residents,etc.)
| 1. |
A plan shall meet either of the following conditions. |
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| (1) |
A plan for lendings and investments which are used in Japan for a period of no less than one year shall support strengthening the foundations for Japan's economic growth, for example, in those areas listed in 1.(1) to 1.(18) of Annex 1, or to borrowers or entities in which financial institutions invest listed in 1.(19) of Annex 1. |
| (2) |
A plan for lendings and investments which are used abroad for a period of no less than one year shall be expected to support strengthening the foundations for Japan's economic growth through the following effects. |
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| i) | An increase in the production of goods and services, business fixed Investment, or employment in Japan. |
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| ii) | The promotion of an international division of labor to enhance domestic economic activities; for example, by shifting more resources to the areas of business planning and research and development, the launch of new businesses, and boosting capacity for business continuity. |
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| iii) | Stable procurement of raw materials consumed in Japan. |
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| 2. |
Borrowers or entities in which financial institutions invest shall be foreign corporations considered to have a close relationship with domestic residents in light of effective control and influence, including consolidated companies of domestic residents. |
| 3. |
The Bank shall be under no obligation to provide funds where, for whatever reasons, it considers this to be inappropriate. |
