The Banking Act (formulated in 1927, then thoroughly revised in 1981) comprises a total of ten chapters which stipulate regulations relating to the scope of banking business and ensuring the soundness of banks (capital adequacy requirements and limits to restrict bank exposures to single borrowers) and regulate accounting (including disclosure provisions), supervision of banks, and so forth.
The regulations divide the scope of banking business into six main categories: 1) typical banking businesses, 2) ancillary businesses, 3) securities businesses, 4) insurance businesses, 5) peripheral businesses, and 6) trust businesses. The key activities for each category are as shown below. The Act also stipulates that banking business may be carried out by means of bank agents.
In addition, as regulations relating to ensuring the soundness of banks, the Act stipulates provisions concerning capital adequacy requirements and limits to restrict bank exposures to single borrowers based on Basel III.
Specifically, the capital adequacy regulations require banks that possess overseas offices (i.e., banks subject to international standards) to comply with a minimum requirement for capital adequacy ratio based on Basel III and requires banks that do not possess overseas offices (i.e., banks subject to domestic standards) to meet a capital adequacy ratio calculated by domestic standards based on Basel III.
Meanwhile, limits to restrict bank exposures to single borrowers require that the amount of credit provided by a bank (or banking group) to one individual (entire group) does not exceed the amount obtained when the bank’s equity capital amount is multiplied by a fixed ratio (the credit provision limit amount).