To dispel anxiety about excessive growth of postal banking and other services, it is important not to forget the basic principles of full-scale privatization.
The upper limit on saving deposits at Japan Post Bank will be doubled from the current 13 million yen to 26 million yen.
The new upper limit will be set at 13 million yen for an ordinary deposit and a fixed-term deposit, respectively. The government intends to revise a relevant ordinance and implement the new limit from April.
In explaining the reason for a large increase in the upper limit, the government's committee on postal service privatization has cited an increasing number of cases in which the amount of money kept in a postal deposit account exceeds the limit when retirement allowances and salaries are transferred to the account. The move seems to be aimed at increasing the convenience of depositors.
The privatization panel has also cited the fact that post offices find it burdensome to offer explanations to people whose deposits have exceeded the upper limit.
The Liberal Democratic Party, which receives support from a national association of postmasters, had demanded a substantial rise in the upper limit. It appears political circumstances may have influenced the latest decision.
During past financial crises, there were widespread moves to withdraw deposits from financially troubled banks before maturity, and shift these funds to postal savings accounts, which are backed by the reliability of the government.
As long as the upper limit is raised, the government needs to pay utmost attention to prevent regional financial systems from being impacted by a large-scale shift of funds.
In April 2016, the upper limit was increased from 10 million yen to 13 million yen. Even though the rise was not followed by a shift of money to postal deposit accounts, it is difficult to remain assured.
Reduce stakeholding
This is because the business environment of regional banks has become even more severe, due to a decline in their earning power that has accompanied a protracted period of extremely low interest rates.
The privatization committee has asked Japan Post group to abolish a system of offering financial incentives to post office employees who persuade customers to deposit money. This can be described as a reasonable measure to prevent an excessive concentration of funds in postal savings accounts.
The Postal Service Privatization Law champions a fundamental principle: to achieve fair and free competition and secure conditions for the postal savings system to compete with the private sector on an equal footing. Based on this, the law states efforts will be made to achieve the sale of all Japan Post Bank shares.
With Japan Post Holdings Co. still possessing an equity stake of 89 percent in Japan Post Bank, however, business operations at the bank have been severely restricted. For example, apart from some exceptions, the bank is not allowed to extend loans.
Amid restrictions on its method of managing capital, it will be even more difficult for the bank to manage its funds if the upper-limit increase leads to a rise in the amount of its outstanding savings.
For Japan Post Bank to start new businesses, it requires authorization from the Financial Services Agency or the Internal Affairs and Communications Ministry. If Japan Post Holdings' equity stake drops below 50 percent, new businesses can be started under a system that only requires these authorities to be notified, which will result in an increase in the degree of freedom for business management.
From the standpoint of diversifying fund-management methods, Japan Post Holdings should steadily advance the sale of its Japan Post Bank shareholdings.
(From The Yomiuri Shimbun, Jan. 28, 2019)
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