FIESS 2011
Relevance and Challenges of Legal Foundations
for NPO-Banks in Japan
17-22 October 2011
Auditor of Japan NPO-BANK Network
Yuko Uehara
About the Japan NPO-Bank network （as of 05th January 2010）
Founded spontaneously by the civil society
Provides loans to socially-requested needs (without differentiating
between social benefit and reciprocity)
Non-profit (although dividend is allowed according to the law)
The fund provided by the civil society is used for loans
Main goal: to give loans to civil society projects (not necessarily by
NPOs, but with priority to the solution of social tasks)
Currently 12 NPO Banks (strictly defined)
(21 banks in a broader sense)
Formulated by Japan NPO-BANK Network：全国のNPOバンクの現況【解説】 (Last revision: 05th January 2010)
List of NPO Banks in Japan （as of March 2011）
（In: thousand of yens）
Obs.
Name
Foundation
Gives loans for
Capital
Total loans
Total
pending
loans
Financing system
Loan fund
other than
capital
Mirai Bank
1994
Purchase of eco-friendly goods, NPO, ecofriendly housing, etc.
162,885
967,294
62,573
Interest rate 3％ (1% with collaterals)
Up to JPY 9 million and 10 years
－
WCA
1998
NPOs, Workers’ collectives etc. working at
Kanagawa Prefecture
127,440
477,765
82,656
Interest rate 1.8 to 5％
Up to JPY 10 million and 5 years
－
Hokkaido NPO Bank
2002
NPO, Workers’ collective
44,709
270,270
11,314
Interest rate: 2% for ordinary loans, 5% for 3months loans. Up to JPY 2 million and 2 years
NPO Yume Bank
(Nagano)
2003
NPO
13,600
158,790
26,204
Interest rate: 2 to 3％
Up to JPY 3 million and 3 years
Tokyo Community
Power Bank
2003
NPO, Workers’ Collective, civil society
entrepreneurs etc.
87,150
145,700
61,833
Interest rate 1.5 to 2.5％
Up to JPY 10 million and 5 years
－
AP Bank
2003
Eco-friendly projects such as renewable
energy
N/A
N/A
N/A
Interest rate: 1％
Up to JPY 5 million and 10 years
－
Community Youth
Bank momo
2005
Projects to build communities where affluent
future can be expected
45,490
52,460
19,407
Interest rate: 2.5％ (2.0 % for bridge loans)
Up to JPY 5 million and 3 years (w/
exceptions)
－
Kumamoto Social
Bank
2008
Social businesses in Kumamoto Prefecture
3,480
0
0
Interest rate: 0 to 3.0％
Up to JPY 3 million and 5 years
－
Tennen-Jutaku Bank
2008
Fund for reforms, bridge loans on buying
houses
39,315
8,504
1,623
Interest rate: 2.0％
Up to JPY 5 million and 10 years
－
Moyai Bank Fukuoka
2009
NPOs, social entrepreneurs etc. in Fukuoka
prefecture or nearby regions
11,310
8,700
5,343
Interest rate: 1.5 to 3.0％
Up to JPY 3 million and 3 years
－
Shinrai Capital
Foundation
2009
Projects to help increase “trust”, such as
agriculture, environment, welfare, medical
service, education and human rights
0
15,500
13,335
Interest rate: 0％
Up to JPY 3 million and 2 years
Donation 24,750
Peace Bank Ishikawa
2010
NPO activities, highly social projects and
community-building projects in Ishikawa
6,571
1,150
1,090
541,950
2,106,133
285,378
Total
Interest rate: 3.0% (1.0% for bridge loans)
Up to JPY 3 million and 5 years
Donation: 7,030
Donation: 35,064
Debt: 20,000
－
In reference to Japan NPO-BANK Network：全国のNPOバンクの現況 (http://www.NPObank.net/docs/201103_NPObank_Genkyo.pdf）
Example: Hokkaido NPO Bank (HNB)
NPO Juridical Person HNB / NPO Bank Business Partnership
Address
Organisation form
NPO Bank Business Partnership＝Voluntary Partnership
(Civil Code Art. 667)
NPO HNB＝NPO juridical person
（registered as money lender no. 02730 at Ishikari, Hokkaido (T3))
Business size

HNB’s mechanism
Hokkaido NPO Support Centre
Kuwagata Building, 2nd Floor, South 2 West 10,
Chuo-ku Sapporo-shi 060-0062 JAPAN
Total capital;
Appr. JPY 44.71 million
Total loans:
Appr. JPY 270.27 million
Pending loans: Appr. JPY 11.31 million
JPY 7.03 million donation on top of capital
（as of end of March 2011)
People
Businesses
Public sector
NPOs
Supporters
Capital
injection
Repay
Donations
Supporter requirement – Individuals over 20, corporations and organisations etc.
NPO Bank
Business
Partnership
Loans
Need to submit the application form, to get the approval at the Board of
Directors and to transfer money at the designated bank account.

The minimum fund is JPY 10,000

The funds are redeemable only during a certain period after the annual closing
of booking

No guarantee for principle nor dividend to funds

The whole capital is financed to HNB.

HNB finances this money into NPOS and workers’ collectives.
Loans
HNB
NPOs
Repay
Elaborated on the basis of Hokkaido NPO Bank：NPOバンクについて（http://NPObank.blogspot.com/）
Laws affecting NPO Banks
Capital Subscription Law (CSL)
Financial Instruments and Exchange Act (FIEA)
Money Lending Business Act (MLBA)
In relation to the Capital Subscription Law (CSL)
About CSL
Formal names is “Act on Regulation of Receiving of Capital Subscription, Deposits, and Interest Rates, etc.”, stipulated in
1954. It restricts the acceptance of funds from general public promising to repay more than the paid amount, forbids nonbanks to accept deposits unless otherwise stipulated at other laws, forbids illegal loans by financial institution‘s employees,
restricts the commission fee on borrowing money and stipulates punishments on usury in order to prevent unforeseen
damages to investors and economic chaos. It was revised in 1983 to lower the maximum interest rate and is considered as
regulating law of consumer finance together with “Money Lending Business Act” which was formulated at the same time.
Challenges and replies
CSL forbids non-banks to guarantee principles and to plan to distribute dividend
-
Risks of no-guarantee is clarified at NPO Banks’ pamphlets
-
NPO Banks have decided not to distribute any dividend at all because of FIEA
In relation to the Financial Instruments and Exchange Act (FIEA)
About FIEA
The Securities and Exchange Act, stipulated in 1948, was changed into FIEA in 2006. It aims to realise the issue of
securities and financial goods in a fair manner, to circulate securities smoothly, to form fair prices of financial products by
fully realising the functions of the capital market, to develop the national economy decently and to protect investors. It
arranges the disclosure system on corporations and stipulates requirements on Financial Instrument Businesses in order to
ensure the appropriate management of financial instruments exchanges.
Challenges and replies
The elaboration of prospectus and registration for the 2nd Financial Instruments Business is
required, which is a huge burden for NPO Banks which have been supporting the civil
society almost entirely by volunteers and the application of this rule would raise the
interest rate too much, jeopardizing the raison-d’être of NPO Banks themselves
- Won the exemption on the condition of not allowing the distribution of dividends as
“investments without distribution of monetary profit such as interest and dividend are not
to be regarded as financial products”
In relation to the Money Lending Business Act (MLBA)
About MLBA
MLBA was stipulated in 1983 changing the money lending business from notification to registration with the aim to change
to run this business appropriately and to protect the interest of money borrowers and was revised in 2007. Over its revisions,
the Gray Zone for interest rates was abolished, more punishment is given for non-registered money lenders, more restriction
on day-time repayment collection on top of nighttime one was strengthened, a measure is taken to avoid excessive lending
and borrowing (borrowing more than a third of your annual income is forbidden) and the need to confirm the borrowers’
whole debt amount at Designated Credit Information Institution is stimulated. It is considered as a regulating law on
consumer finance.
Challenges and replies
Increase of money lender‘s minimum net asset to JPY 50 million
Compulsory enrollment into the Designated Credit Information Institution
Introduction of Total Volume Control
Obligation to have one full-time counselor who has worked for providing loans for at least
three years
- A special rule of JPY 5 million is added for net asset requirement
- Other requirements are exempted on the condition of maximum 7.5% annual interest rate
for the indigent or for socially beneficial non-profit lending (17 fields at NPO Act)
Towards NPO Banks’ future
Future challenges
“No dividend for investors” restricts the potential of civil society activities
NPO Banks are obliged to pay money lending agency registration fee and financial ADR (Alternative
Dispute Resolution) yearly contribution because of its character as money lenders
NPO Banks, performing on the non-profit basis, will be affected by regulations aimed at commercial
organisations every time a new law revision is done
Towards the future
The Democratic Party, taking power in 2009, aims at “promoting a new public sphere,” positioning
NPO Banks as a financial scheme for “a new public sphere”
Lobbying for the stipulation of NPO Bank act to enable the setup of non-profit bank juridical person
and discussing specific requirements, governance and interest rates
A permanent counselor at JNBN joins “A new public sphere” promotion congress, proposing how
NPO Banks will be
Civil Society Policy Investigation started a research project on “legal systems on new non-profit
financial projects beneficial to local communities,” trying to propose policies to build such systems
More expectation on non-profit and socially-beneficial finance, so appropriate law
is now needed for such needs
Fin