Banking Act (Ginkōhō)
The Banking Act (Ginkōhō) governs the regulation and supervision of banking institutions in Japan. Enacted in 1981, the Act establishes the licensing requirements for banks, the scope of banking activities, prudential regulation, and the supervisory powers of the Financial Services Agency. The Act has been amended to implement Basel Accords, strengthen corporate governance, and address financial stability concerns.
Legal area: Law governing the regulation and supervision of banking institutions.
Year enacted: 1981
Full text: https://elaws.e-gov.go.jp/document?lawid=japan-banking-act
Key Provisions
- Chapter I: General provisions (definition of banking)
- Chapter II: Licensing and registration (capital requirements, governance)
- Chapter III: Business conduct (deposit-taking, lending, investment)
- Chapter IV: Prudential regulation (capital adequacy, risk management)
- Chapter V: Supervision (inspections, corrective orders)
- Chapter VI: Deposit insurance (system stability)
Significance
The Banking Act is the primary regulatory framework for Japan’s banking sector. The Act has been amended to implement Basel III capital requirements and strengthen corporate governance. Japan’s banking sector has faced challenges including the legacy of non-performing loans and prolonged low interest rates. The Act’s provisions on bank holding companies have facilitated consolidation in the banking sector. The FSA conducts regular inspections to ensure compliance with prudential requirements.