Regulatory Alerts2023-09-21
JFSA's Supervisory Approaches to Lending Business
The Financial Services Agency (JFSA) of Japan outlines its transformed supervisory approaches to lending business, moving away from rigid, standardized inspection manuals to foster more flexible and tailored oversight. This shift addresses the evolving financial landscape, including challenging business environments and diversified customer needs, by encouraging financial institutions to develop lending and loan review policies consistent with their unique business models and by emphasizing in-depth understanding of their specific credit risks and forecasts. The JFSA will prioritize dialogue based on each institution's characteristics, assess internal control systems for effectiveness rather than conformity, and promote discussions on capital adequacy and the identification of future credit risks beyond traditional loan classification.