UPDATE 1-BOJ may offer 1 trln yen in new loan scheme -media

(For more stories on the Japanese economy click [ID:nECONJP])

* BOJ’s new loan scheme to begin in September – Asahi

* BOJ likely to announce details of scheme June 14-15
(Adds details)

By Leika Kihara

TOKYO, June 2 (BestGrowthStock) – The Bank of Japan may lend at least
1 trillion yen ($11 billion) to commercial banks under a new loan
programme to support industries with growth potential that was
outlined last month, the Asahi newspaper said on Wednesday.

The central bank will begin lending to banks from September
and keep the facility in place for about five years, the paper
said without citing sources.

In what it sees as a long-term approach to beating deflation,
the BOJ outlined a programme last month under which it offers
one-year loans at 0.1 percent interest to banks that will fund
projects in sectors with growth potential. [ID:nTOE64K025]

It is expected to announce details of the framework, such as
when it will start, when it will expire and the amount of funds
to be offered, at its next policy-setting meeting on June 14-15.

The BOJ has said the loan plan is not intended to be monetary
easing but is aimed more at encouraging commercial banks to
cultivate industries with new areas of growth.

BOJ Governor Masaaki Shirakawa has said the central bank may
set a limit to the amount of loans that will be extended, so the
money flowing into the economy would not influence monetary

The BOJ is still having consultations with commercial banks
in mapping out details of the scheme.

It is examining offering a combined 1 trillion yen in loans
to banks, including about 100 billion yen each to Japan’s three
megabanks, the Asahi said.

It may raise the cap if demand for funds from banks is
strong, the paper said.

The BOJ has kept interest rates near zero since late 2008 and
loosened monetary policy through a facility offering cheap funds
to banks. While that has helped the economy recover from a severe
slump after the Lehman crisis, Japan remains mired in grinding
deflation due largely to weak domestic demand.

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(Editing by Michael Watson)

UPDATE 1-BOJ may offer 1 trln yen in new loan scheme -media