The Japan Financial Services Agency has published draft Cabinet Order and Cabinet Office Ordinance amendments to implement the 2026 changes to the Act on Special Measures for Strengthening Financial Functions and opened them for public comment. The package would tighten governance conditions for cooperative financial institutions under the capital participation system, define and broaden support under the fund provision system for mergers and shared core banking systems among smaller regional institutions, and raise the overall ceiling for grants to JPY 200 billion. For cooperative financial institutions, independence requirements for outside auditors would exclude major business partners of the institution and their officers and employees, and submitted plans would need to provide for at least two outside auditors including at least one independent outside auditor. Under the fund provision system, applications tied to mergers and business integrations would be accepted for four months after management integration. Support for joint systems would be limited to core banking systems jointly used by three or more financial institutions or groups. Eligible institutions would include regional banks with deposits below JPY 5 trillion and cooperative financial institutions. Grant-eligible activities would cover building a new joint system, joining an existing one, integrating existing systems, and renewal by central agencies for cooperative financial institutions. Eligible costs would include system development and penalties arising from the termination of existing system contracts. The draft would also raise the maximum number of members of the Financial Function Enhancement Review Board from six to seven and abolish the existing Financial Function Enhancement Act Guidelines, with corresponding content moved into the Comprehensive Supervisory Guidelines for Small and Regional Financial Institutions. Comments are due by June 5, 2026. The agency plans to complete the necessary procedures after the consultation before promulgation and enforcement.
Japan Financial Services Agency2026-05-22
Japan Financial Services Agency launches consultation on 2026 financial function strengthening rules with JPY 200 billion grant ceiling and new auditor requirements for cooperatives
The Japan Financial Services Agency has proposed draft Cabinet Order and Cabinet Office Ordinance amendments to implement 2026 changes to the Act on Special Measures for Strengthening Financial Functions, including tighter governance for cooperative financial institutions and expanded support for mergers and shared core banking systems among smaller regional institutions. The package would raise the grant ceiling to JPY 200 billion, broaden eligible institutions and costs for joint core banking systems, increase the maximum members of the Financial Function Enhancement Review Board to seven, and move existing guideline content into the Comprehensive Supervisory Guidelines for Small and Regional Financial Institutions.