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Principal Terms and Conditions of the Special Funds-Supplying Operations to Facilitate Financing in Response to the Novel Coronavirus (COVID-19)

March 16, 2020

Revision : April 27, 2020
May 22, 2020
December 18, 2020
March 19, 2021
June 18, 2021
December 17, 2021
September 22, 2022

1. Purpose

Given the impact of the novel coronavirus (COVID-19) on economic activity, these terms and conditions prescribe the principles for the Bank of Japan's special funds-supplying operations to facilitate financing (i.e., an open market operation through which the Bank provides loans that are made against eligible collateral within the amount outstanding of loans made by eligible counterparties to small and medium-sized firms in response to COVID-19) as a temporary measure, with a view to doing its utmost to ensure smooth financing of the private sector and maintaining stability in financial market through appropriate market operations.

2. Location of Operations

The Bank's Head Office (Operations Department) or its branches.

3. Eligible Counterparties

  1. (1) Eligible counterparties shall, pursuant to the Bank's relevant rules, be selected from financial institutions, etc. (prescribed in Article 37, paragraph 1 of the Bank of Japan Act [Act No. 89, 1997]) and the Development Bank of Japan Inc. that satisfy the following requirements.
    1. (a) To have a current account at the Bank.
    2. (b) To be deemed sufficiently creditworthy in light of its capital condition and other relevant information obtained through the Bank's on-site examinations and so forth.
  2. (2) If the Bank specifically deems it necessary in order to conduct market operations smoothly, it can implement such measures as an exclusion of the institution in question from eligible counterparties.

4. Form of Loans

Loans shall be provided in the form of electronic lending.

5. Duration of Loans

The duration of each loan shall be within one year.

6. Loan Rates

The interest rate on loans shall be 0 percent per annum.

7. Counterparties

Counterparties of each loan are eligible counterparties selected pursuant to 3. that wish to be counterparties for the loan.

8. Maximum Amount of Newly-Disbursed Loans for Each Counterparty

The maximum amount of newly-disbursed loans for each counterparty at each loan disbursement shall be as prescribed in (1) and (2) below. However, it shall not exceed the unused value of total standing pool of eligible collateral pledged to the Bank at the time of loan disbursement.

  1. (1) For Counterparties against Their Non-Government-Supported Loans
    The amount shall be calculated by subtracting the amount prescribed in (b) from the amount prescribed in (a) (zero in the case where the subtracted amount is negative).
    1. (a) Of the total amount outstanding of loans made by each counterparty to small and medium-sized firms in response to COVID-19 at the time determined pursuant to the relevant rules of the Bank, the amount outstanding of loans that are equivalent to "government-supported loans" (loans which each counterparty makes through the guarantee by the credit guarantee corporations or the program to reduce or exempt interest rates, both of which are based on the government's budgetary measures) in terms of loan conditions (hereinafter referred to as "non-government-supported loans")
    2. (b) The sum of the amounts outstanding prescribed in i) and ii) below
      1. i) The amount outstanding of loans disbursed to each counterparty based on (1) (excluding the existing loans that reach maturity on the date when the said new loans are disbursed) at the time of the offering
      2. ii) The amount outstanding of loans disbursed to each counterparty on or before March 31, 2022 under these terms and conditions (excluding the existing loans that reach maturity on the date when the said new loans are disbursed) at the time of the offering
  2. (2) For Counterparties against Their Government-Supported Loans
    The amount shall be calculated by subtracting the amount prescribed in (b) from the amount prescribed in (a) (zero in the case where the subtracted amount is negative). However, it shall not exceed the amount prescribed in (c).
    1. (a) The amount outstanding of government-supported loans made by each counterparty at the time determined pursuant to the relevant rules of the Bank
    2. (b) The amount outstanding of loans disbursed to each counterparty based on (2) (excluding the existing loans that reach maturity on the date when the said new loans are disbursed) at the time of the offering
    3. (c) The amount calculated by subtracting the amount prescribed in ii) from the amount prescribed in i) below (zero in the case where the subtracted amount is negative)
      1. i) The sum of the amounts outstanding of non-government-supported loans and government-supported loans made by each counterparty at the time determined pursuant to the relevant rules of the Bank
      2. ii) The amount outstanding of loans disbursed to each counterparty under these terms and conditions (excluding the existing loans that reach maturity on the date when the said new loans are disbursed) at the time of the offering

9. Deadline for New Application for Loans

  1. (1) Against Non-Government-Supported Loans
    The period for new application for loans disbursed against non-government-supported loans shall end on March 31, 2023.
  2. (2) Against Government-Supported Loans
    The period for new application for loans disbursed against government-supported loans shall end on December 31, 2022.

10. Date of Loan Disbursement, Amount of Loans, etc.

Taking account of conditions in financial markets, the Bank shall determine specifics necessary for lending at each loan disbursement, including its date and amount.

11. Collateral

  1. (1) The Bank shall accept eligible collateral from counterparties in advance.
  2. (2) The "Guidelines on Eligible Collateral" (Policy Board Decision on October 13, 2000) and the "Collateral Guidelines on Eligible Foreign Bonds" (Policy Board Decision on May 22, 2009) shall apply to the collateral for the loans.

Supplementary Provision

These terms and conditions shall become effective today and shall be valid through March 31, 2023. To the loans that are disbursed on or before March 31, 2023, these terms and conditions shall be applied until their maturities.