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Principal Terms and Conditions for the Fund-Provisioning Measure to Support Strengthening the Foundations for Economic Growth Conducted through the Loan Support Program

June 15, 2010

Revision:March 13, 2012
December 20, 2012
February 18, 2014
March 11, 2014
March 17, 2015
January 29, 2016
January 31, 2017
January 23, 2018
January 23, 2019
June 20, 2019
January 21, 2021

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

  1. (1) Eligible counterparties shall, pursuant to the Bank's relevant rules, be selected from financial institutions, etc. (as defined in Article 37, Paragraph 1 of the Bank of Japan Act [Act No. 89, 1997]) and the Development Bank of Japan Inc. satisfying the eligibility criteria listed below.
    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 operate the Loan Support Program 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 loans to financial institutions shall be set as within four years.

6. Loan Rates

The interest rate on loans shall be 0.1 percent per annum.

7. Date of Each Loan Disbursement

The date of each loan disbursement shall be specified by the Bank. No loan shall be disbursed after June 30, 2022.

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

The maximum amount of loans provided to each counterparty during the period not exceeding a year specified by the Bank shall be equivalent to either the amount in (1) or (2), depending on each counterparty's choice.

  1. (1) The total amount of loans provided to each counterparty pursuant to these principal terms and conditions, as well as the abolished "Special Rules for Equity Investments and Asset-Based Lending to Enhance the Fund-Provisioning Measure to Support Strengthening the Foundations for Economic Growth Conducted through the Loan Support Program" (Policy Board Decision on June 14, 2011) and the abolished "Special Rules for Small-Lot Investments and Loans to Enhance the Fund-Provisioning Measure to Support Strengthening the Foundations for Economic Growth Conducted through the Loan Support Program" (Policy Board Decision on March 13, 2012) for a certain year (from April 1 to March 31 of the following year, the same applies to (2)) when the total amount of loans disbursed to the counterparty was the largest, during the three years from April 1, 2016 to March 31, 2019.
  2. (2) The amount of new lending or investment listed from (a) to (c) in the following carried out within a certain year specified by the Bank based on the plan to support strengthening the foundation for economic growth described in 11. submitted to the Bank.
    1. (a) Lending or investment with a maturity of one year or more (excluding the following (b) and (c))
    2. (b) Equity investments (investments and loans with equity-like features)
    3. (c) Asset-based lending (loans without real estate collateral or guarantees that are deemed appropriate by the Bank)

10. Prepayment

The counterparty may prepay all or a part of the outstanding amount of loans on an annual basis, on a day specified by the Bank.

11. 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.

12. 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 June 30, 2026.

Annex 1 : Conditions that Plans to Support Strengthening the Foundations for Economic Growth Shall Meet

  1. The plan shall be formulated to support strengthening the foundation for economic growth, through lending or investment listed from (a) to (c) in 9.(2) of these principal terms and conditions. For example, the funds received shall be used in one of the areas listed from (1) to (18) in the following, or borrowers or entities in which financial institutions invest shall be those listed in (19).
    1. (1) Research and development
    2. (2) Setting up a new business
    3. (3) Business reorganization
    4. (4) Investment and business deployment in Asian and other countries
    5. (5) Science and technology research at universities and research institutions
    6. (6) Development and upgrading of social infrastructure
    7. (7) Environment and energy business
    8. (8) Business for securing and developing natural resources
    9. (9) Medical, nursing care, and other health-related business
    10. (10) Business serving the needs of senior citizens
    11. (11) Business in the content creation industry
    12. (12) Tourism business
    13. (13) Regional and urban revitalization business
    14. (14) Agriculture, forestry, and fisheries business; Business linking agriculture, commerce, and industry
    15. (15) Business which supports the creation of housing stock
    16. (16) Disaster prevention business
    17. (17) Employment support and human resources development business
    18. (18) Childcare services business
    19. (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
  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, etc. 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.
    1. (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. (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.
      1.   i) An increase in the production of goods and services, business fixed Investment, or employment in Japan.
      2.  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.
      3. iii) Stable procurement of raw materials consumed in Japan.
  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.