ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter
Finance

Japan banks to forgive bounced checks for foreseeable future

Measure will offer grace period for small companies affected by the coronavirus

An almost empty restaurant in Tokyo: small businesses are expected to be hit especially hard from the coronavirus outbreak.   © Reuters

TOKYO -- Companies defaulting on payments will not be blacklisted for the foreseeable future under measures announced Friday by the Japanese Bankers Association, a move to help cash-poor small and midsize businesses survive the coronavirus pandemic.

As much as 184 trillion yen, or $1.7 trillion, was held in bills of exchange or promissory notes in Japan last year. Despite electronic alternatives, many small and midsize businesses still rely on paper promissory notes, which let them push back settlements a few months.

Missing a payment can have ruinous effects on a business's credit. Banks normally cut off a company that defaults twice in half a year. The business cannot issue new notes, often leading to its bankruptcy.

To apply for the new measures, a company that cannot have money ready in its bank accounts on the due date must report to a clearinghouse that its business has been affected by the coronavirus. The clearinghouse will ensure that the company does not get blacklisted in an interbank information network that shares credit histories.

Friday's changes are meant to defer blacklisting, and the companies still must make the promised payments eventually.

The banking association has offered a similar grace period twice before, after the 1995 Kobe earthquake and the 2011 earthquake and tsunami in northeastern Japan.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends October 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more