18-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 18-K

For Foreign Governments and Political Subdivisions Thereof

ANNUAL REPORT

of

JAPAN FINANCE CORPORATION

(Name of registrant)

Date of end of last fiscal year: March 31, 2011

SECURITIES REGISTERED*

(As of the close of the fiscal year)

Title of Issue	Amounts as to Which Registration is Effective	Names of Exchanges on Which Registered
N/A	N/A	N/A

Names and addresses of persons authorized to receive notices

and communications from the Securities and Exchange Commission:

NORIKO NASU

Chief Representative

Representative Office in New York

Japan Bank for International Cooperation

Japan Finance Corporation

712 Fifth Avenue 26th Floor

New York, NY 10019 U.S.A.

Copies to:

Garth W. Bray

Sullivan & Cromwell LLP

Otemachi First Square

5-1, Otemachi 1-chome

Chiyoda-ku, Tokyo 100-0004

* The registrant is filing this annual report on a voluntary basis.

This Annual Report on Form 18-K of Japan Finance Corporation (the “registrant”) is intended to be incorporated by reference into Registration Statement No. 333-157296 of the registrant and Japan filed on February 13, 2009.

The information set forth below is to be furnished:
1.	In respect of each issue of securities of the registrant registered, a brief statement as to:
	(a)	The general effect of any material modifications, not previously reported, of the rights of the holders of such securities.
Not applicable.*
	(b)	The title and the material provisions of any law, decree or administrative action, not previously reported, by reason of which the security is not being serviced in accordance with the terms thereof.
Not applicable.*
	(c)	The circumstances of any other failure, not previously reported, to pay principal, interest, or any sinking fund or amortization installment.
Not applicable.*
2.	A statement as of the close of the last fiscal year of the registrant giving the total outstanding of:
	(a)	Internal funded debt of the registrant. (Total to be stated in the currency of the registrant. If any internal funded debt is payable in a foreign currency, it should not be included under this paragraph (a), but under paragraph (b) of this item.)
Reference is made to pages 51 to 55 of Exhibit 2 hereto.
	(b)	External funded debt of the registrant. (Totals to be stated in the respective currencies in which payable. No statement need be furnished as to intergovernmental debt.)
Reference is made to pages 51 to 55 of Exhibit 2 hereto.
3.	A statement giving the title, date of issue, date of maturity, interest rate and amount outstanding, together with the currency or currencies in which payable, of each issue of funded debt of the registrant outstanding as of the close of the last fiscal year of the registrant.
Reference is made to pages 51 to 54 of Exhibit 2 hereto.
4.	(a)	As to each issue of securities of the registrant which is registered, there should be furnished a breakdown of the total amount outstanding, as shown in Item 3, into the following:
		(1)	Total amount held by or for the account of the registrant.
Not applicable.*
		(2)	Total estimated amount held by nationals of the registrant (or if registrant is other than a national government by the nationals of its national government); this estimate need be furnished only if it is practicable to do so.
Not applicable.*
		(3)	Total amount otherwise outstanding.
Not applicable.*
	(b)	If a substantial amount is set forth in answer to paragraph (a)(1) above, describe briefly the method employed by the registrant to reacquire such securities.
Not applicable.*

* No securities of the registrant are registered under the Securities Exchange Act of 1934, as amended.

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5.	A statement as of the close of the last fiscal year of the registrant giving the estimated total of:
	(a)	Internal floating indebtedness of the registrant. (Total to be stated in the currency of the registrant.)
None.
	(b)	External floating indebtedness of the registrant. (Total to be stated in the respective currencies in which payable.)
None.
6.	Statement of the receipts, classified by source, and of the expenditures, classified by purpose, of the registrant for each fiscal year of the registrant ended since the close of the latest fiscal year for which such information was previously reported. These statements should be so itemized as to be reasonably informative and should cover both ordinary and extraordinary receipts and expenditures; there should be indicated separately, if practicable, the amount of receipts pledged or otherwise specifically allocated to any issue registered, indicating the issue.
Reference is made to page 4 of Exhibit 2 hereto and pages 3 and 7 of Exhibit 4 hereto.
7.	(a)	If any foreign exchange control, not previously reported, has been established by the registrant (or if the registrant is other than a national government, by its national government), briefly describe such foreign exchange control.
None.
	(b)	If any foreign exchange control previously reported has been discontinued or materially modified, briefly describe the effect of any such action, not previously reported.
Not applicable.
This annual report comprises:
	(a)	The cover page and pages numbered 2 to 5 consecutively.
	(b)	The following exhibits:
		(1)	Description of Japan Finance Corporation dated September 7, 2011.
		(2)	Audited financial statements of Japan Finance Corporation for the fiscal year ended March 31, 2010 and the fiscal year ended March 31, 2011.
		(3)	Consent of Ernst & Young ShinNihon LLC.
		(4)	Unaudited financial statements of the JBIC Operations for the fiscal year ended March 31, 2010 and the fiscal year ended March 31, 2011 and the Financial Operations for Facilitating Realignment of United States Forces in Japan for the fiscal year ended March 31, 2011.
		(5)	Excerpt of General Rules of the National Budget, which relates to the registrant for the fiscal year ending March 31, 2012 (in Japanese only).*
		(6)	Japan Finance Corporation Law (Law No. 57 of 2007), as amended (English translation).
		(7)	Certificate of Nagashima Ohno & Tsunematsu.

This Annual Report is filed subject to the Instructions for Form 18-K for Foreign Governments and Political Subdivisions Thereof.

* Filed under cover of Form SE on September 7, 2011.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized, at Tokyo, Japan on the 7th day of September, 2011.

JAPAN FINANCE CORPORATION
By:	/s/    Toshiro Machii
	Toshiro Machii
	Head
	Treasury Department
	Japan Bank for International Cooperation
	Japan Finance Corporation

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EXHIBIT INDEX

Exhibit Number	Description
1.	Description of Japan Finance Corporation dated September 7, 2011.
2.	Audited financial statements of Japan Finance Corporation for the fiscal year ended March 31, 2010 and the fiscal year ended March 31, 2011.
3.	Consent of Ernst & Young ShinNihon LLC.
4.	Unaudited financial statements of the JBIC Operations for the fiscal year ended March 31, 2010 and the fiscal year ended March 31, 2011 and the Financial Operations for Facilitating Realignment of United States Forces in Japan for the fiscal year ended March 31, 2011.
5.	Excerpt of General Rules of the National Budget, which relates to the registrant for the fiscal year ending March 31, 2012 (in Japanese only).*
6.	Japan Finance Corporation Act (Act No. 57 of 2007), as amended (English translation).
7.	Certificate of Nagashima Ohno & Tsunematsu.

* Filed under cover of Form SE on September 7, 2011.

5

EX-99.1

Exhibit 1

Japan Finance Corporation

This description of Japan Finance Corporation is dated September 7, 2011 and appears as Exhibit 1 to its Annual Report on Form 18-K filed with the U.S. Securities and Exchange Commission.

THE DELIVERY OF THIS DOCUMENT AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THIS DOCUMENT (OTHERWISE THAN AS PART OF A PROSPECTUS CONTAINED IN A REGISTRATION STATEMENT FILED UNDER THE U.S. SECURITIES ACT OF 1933) DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OF JAPAN FINANCE CORPORATION.

TABLE OF CONTENTS

FURTHER INFORMATION	2
JAPAN FINANCE CORPORATION	3
JBIC’s Operations	3
Domestic Financial Operations	5
CAPITALIZATION	6
BUSINESS	9
Missions	9
Government Control and Supervision	9
Overview of JFC’s Operations	9
Overview of JBIC’s Operations	9
Capital of the JBIC Operations and the Domestic Financial Operations	14
Non-performing Loans	14
Risk Management – General	16
Risk Management – JBIC Operations	17
MANAGEMENT	20
DEBT RECORD	21
FINANCIAL STATEMENTS	21
SUPPLEMENTAL INFORMATION	21

FURTHER INFORMATION

This document appears as an exhibit to the Annual Report of Japan Finance Corporation (“JFC”) filed with the U.S. Securities and Exchange Commission (the “Commission”) on Form 18-K. Additional information with respect to JFC is available in such Annual Report, in the other exhibits to such Annual Report and in amendments thereto. Such Annual Report, exhibits and other amendments may be inspected and copied at the public reference room maintained by the Commission at: 100F Street, N.E., Washington, D.C. 20549. Information regarding the operations of the public reference room can be obtained by calling the Commission at 1-800-SEC-0330 or, without charge, from JFC by telephoning 813-5218-3304. Such Annual Report, exhibits and other amendments are also available through the Commission’s Internet website at http://www.sec.gov.

In this document, all amounts are expressed in Japanese Yen (“¥” or “yen”), except as otherwise specified. The spot buying rate quoted on the Tokyo Foreign Exchange Market on September 6, 2011 as reported by the Bank of Japan at 5:00 p.m., Tokyo time, was 76.75 = $1.00, and the noon buying rate on September 2, 2011 for cable transfers in New York City payable in yen, as reported by the Federal Reserve Bank of New York, was 76.79 = $1.00.

References in this document to fiscal years of JFC are to the 12-month periods commencing on April 1 of the year indicated.

References in this document to “JBIC” are to “Japan Bank for International Cooperation, the international arm of JFC”, under which name JFC conducts its international financial operations.

Figures in tables included in this document may not add up to totals due to rounding.

2

JAPAN FINANCE CORPORATION

JFC is a joint stock corporation organized under the laws of Japan. JFC was established on October 1, 2008, and succeeded to the assets, and assumed the obligations, in each case other than those of the Overseas Economic Cooperation Operations and certain minor assets to which the Japanese government succeeded, of Japan Bank for International Cooperation (the predecessor to JFC) (the “Predecessor”), and also succeeded to the assets, and assumed the obligations, in each case other than certain minor assets to which the Japanese government succeeded, of the National Life Finance Corporation, Japan Finance Corporation for Small and Medium Enterprise and the Agriculture, Forestry and Fisheries Finance Corporation (collectively, the “Other Predecessors”) pursuant to Japan Finance Corporation Law (Law No. 57 of 2007), as amended (the “JFC Act”). The assets and obligations of the Overseas Economic Cooperation Operations of the Predecessor were transferred to the Incorporated Administrative Agency—the Japan International Cooperation Agency. JFC established a separate international arm that is to solely and exclusively conduct the international financial operations of JFC, which continues to operate under the name of “Japan Bank for International Cooperation” or “JBIC” pursuant to the JFC Act. The Predecessor and the Other Predecessors were abolished as of October 1, 2008.

JFC carries out the operations provided in the JFC Act and other laws. Under Article 41 of the JFC Act, Article 18 of the Act on Special Measures Concerning Smooth Implementation of Realignment of United States Forces in Japan and Article 17 of the Bill on the Promotion of Businesses to Develop and Manufacture Energy and Environmentally Friendly Products, JFC is required to separate the accounting for each category of the operations as follows.

• Operations described in Item (1) under Article 41 of the JFC Act (the “Micro Business and Individual Operations”).

• Operations described in Item (2) under Article 41 of the JFC Act (the “Agriculture, Forestry, Fisheries and Food Business Operations”)

• Operations described in Item (3) under Article 41 of the JFC Act (the “SME Loan Programs and Securitization Support Programs (Guarantee-type Operation)”)

• Operations described in Item (4) under Article 41 of the JFC Act (the “Securitization Support Programs (Purchase-type Operation)”)

• Operations described in Item (5) under Article 41 of the JFC Act (the “Credit Insurance Programs”)

• Operations described in Item (6) under Article 41 of the JFC Act (the “JBIC Operations”)

• Operations described in Article 16 of the Act on Special Measures Concerning Smooth Implementation of Realignment of United States Forces in Japan (the “Financial Operations for Facilitating Realignment of United States Forces in Japan”)*

• Operations described in Item (7) under Article 41 of the JFC Act (the “Operations to Facilitate Crisis Responses”)*

• Operations described in Article 6 of the Bill on the Promotion of Businesses to Develop and Manufacture Energy and Environmentally Friendly Products (the “Operations to Facilitate Specific Businesses Promotion”)*

JFC succeeded to the JBIC Operations from the Predecessor, and to the other operations except the Operations to Facilitate Crisis Responses and the Operations to Facilitate Specific Businesses Promotion from the Other Predecessors. The Operations to Facilitate Crisis Responses and the Operations to Facilitate Specific Businesses Promotion were added to JFC’s operations after its establishment. (JFC’s operations other than the JBIC Operations and the Financial Operations for Facilitating Realignment of United States Forces in Japan are referred to herein as the “Domestic Financial Operations”)

* The English names for the Financial Operations for Facilitating Realignment of United States Forces in Japan, the Operations to Facilitate Crisis Responses and the Operations to Facilitate Specific Businesses Promotion have been changed from the Financial Operations for Facilitating Realignment of U.S. Forces Japan, the Crisis Response Operations and the Domestic Operations for Energy and Environment Support, respectively, since last fiscal year.

JBIC’s Operations

JBIC Operations

As the international arm of JFC, JBIC conducts the JBIC Operations to fulfill the following four missions in order to contribute to the sound development of the international as well as Japanese economy: (a) promoting overseas development and securement of resources which are strategically important for Japan, (b) maintaining and improving the international competitiveness of Japanese industries, (c) promoting the overseas business having the purpose of preserving the global environment, such as preventing global warming, and (d) taking appropriate measures with respect to disruptions to international financial order.

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In order to execute the above missions, JBIC provides multi-faceted support for the development of developing countries and Japan to meet their increasingly diverse financing needs through integral combination of the following seven operations by way of financing instruments such as lending, guarantees, acquisition and securitization of public/corporate bonds, assignment and securitization of loan assets and equity participations.

• Export Loans

Export loans provide funds to support exports of equipment by Japanese companies and overseas transfer of their technologies.

• Import Loans

Import loans provide funds to support imports of oil, LNG, iron ore and other strategically important materials to Japan. Apart from resources, the guarantee facility supports imports of goods and services for which there are crucial domestic needs, such as aircraft.

• Overseas Investment Loans

Investment loans provide funds to support overseas investment projects undertaken by Japanese companies for manufacturing, resource development, and other business ventures.

• Untied Loans

Untied loans provide funds to support improvements in the overseas business environment to facilitate Japanese trade, investments and other overseas business activities. Untied loans also support projects undertaken by foreign governments and government agencies.

• Bridge Loans

Bridge loans provide short-term financing for developing country governments facing balance-of payments difficulties to enable them to ride out temporary strains in foreign currency management.

• Equity Participation

Equity participation is equity investment in overseas joint ventures involving Japanese companies, or funds in which Japanese companies participate.

• Studies and Research Activities

JBIC conducts studies and research to support its operations

Financial Operations for Facilitating Realignment of United States Forces in Japan

The Act on Special Measures Concerning Smooth Implementation of Realignment of United States Forces in Japan was passed in May 2007 as a special legislation related to the (then) Japan Bank for International Cooperation Law, authorizing JBIC to provide financial services for facilitating the realignment of United States Forces in Japan as exceptional measures.

Following the passing of the FY2010 budget bill on March 24, 2010, JBIC established the Finance Department for Facilitating Realignment of United States Forces in Japan, and set up a separate account for the financial services by such Department, segregating it from JFC’s other accounts.

The financial services are equity investments, loans and other operations necessary for projects (such as the public-private partnerships of family housing and infrastructure projects associated with the relocation of U.S. marine force personnel and their dependents to Guam) to facilitate the realignment of United States Forces in Japan, but as of the date of registering this form, there has been no equity and loan provision.

Recent Development regarding JBIC Spin Off from JFC

On April 28, 2011, the Japan Bank for International Cooperation Act (the “JBIC Act”) was passed into law, pursuant to which, on April 1, 2012, the JBIC Operations and the Financial Operations for Facilitating Realignment of United States Forces in Japan will be transferred out of JFC to establish an independent policy-based financial institution (the “new JBIC”). The Japanese government will own all of the shares of the new JBIC.

After April 1, 2012, with respect to bonds issued by the Predecessor, the new JBIC and the Japan International Cooperation Agency will jointly and severally assume the obligations under such bonds. With respect to bonds issued by JFC prior to the establishment of the new JBIC on April 1, 2012, the post-spin off JFC and the new JBIC will jointly and severally assume the obligations under such bonds. The guarantee on the bonds by the Japanese government will remain in effect under the same conditions and such bonds will continue to rank senior in terms of payment to unsecured general obligations not represented by debt securities.

Pursuant to the JBIC Act, the following loan operations, which are extensions of the current JBIC Operations, will be provided starting in fiscal year 2011 in advance of the establishment of the new JBIC:

• Export finance for industrialized countries. Direct loans are provided to companies in industrialized countries importing goods from Japanese exporters in specific industrial sectors, which are to be stipulated by a cabinet order.

• Overseas investment finance for equity investments in foreign enterprises. Overseas investment loans for equity investments in foreign enterprises are provided, along with loans from private financial institutions, to Japanese companies in specific industrial sectors, which are to be stipulated by a cabinet order.

• Overseas investment finance for short-term bridge loans. Short-term bridge loans for investments in overseas projects are provided to Japanese companies in order to bridge shortfalls prior to the provision of long-term loans.

• Two-step loans through Japanese banks. Loans are provided to Japanese private financial institutions which in turn provide loans to (i) small and medium enterprises to support their overseas investments and to (ii) Japanese companies to support their equity investments in foreign companies.

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In addition, the new JBIC will provide the following new guarantee operations starting from April 2012:

• Guarantees for currency swaps. Guarantees for currency swaps between the swap counter parties and private financial institutions will be provided in order to promote local currency loans to finance the overseas projects of Japanese companies.

• Assistance for assignment and securitization of accounts receivable. Guarantees for the assignment of accounts receivable from Japanese companies operating overseas to the foreign subsidiaries or foreign branches of Japanese financial institutions will be provided in order to enhance liquidity. Accounts receivable-backed securities will also be eligible for this new guarantee program.

• Counter-guarantees for export credits. Counter-guarantees to foreign export credit agencies for export credits will be provided in order to facilitate joint financing arrangements among international export credit agencies.

Domestic Financial Operations

Apart from the JBIC Operations and the Financial Operations for Facilitating Realignment of United States Forces in Japan, JFC conducts the Domestic Financial Operations aimed at micro business and individuals, agriculture, forestry, fisheries and food business, small and medium enterprises and to facilitate appropriate measures against crises.

• Micro Business and Individual Operations

JFC provides a wide range of loans closely related to people’s lives, such as Business Loans to micro/small enterprises, Educational Loans for people who have to deal with education related-expenses, and Loans Secured by Pensions, etc.

• Agriculture, Forestry, Fisheries and Food Business Operations

JFC provides loans for business funds at long-term and low interest rates, and helps those who are engaged in agriculture, forestry, fisheries and food industry develop their business operations through support services such as management consultations, matching services and provision of technical information. With these services, the business intends to promote the reinforcement of agriculture, forestry and fisheries in Japan, and support stable supply of safe and good-quality of foods.

• SME Loan Programs and Securitization Support Programs (“Guarantee-type Operation”), Securitization Support Programs (“Purchase-type Operation”), and Credit Insurance Programs

JFC provides smooth supply of business funds for Small Medium Enterprises (“SMEs”) through “Loan Programs,” “Securitization Support Programs” and “Credit Insurance Programs,” to support growth and development of SMEs. Loan Programs supply stable, long-term funds that are essential for the promotion of SME business and yet found difficulties for private financial institutions to supply on a commercial basis. Securitization Support Programs support private financial institutions in their endeavors based on securitization methods. Credit Insurance Programs focus on the acceptance of insurance on CGC guaranteed liabilities associated with loans to SMEs.

• Operations to Facilitate Crisis Responses

JFC provides a certain credit to designated financial institutions at the time of occurrence of crises certified by competent ministers such as financial disorder, large-scale disasters and other similar events both at home and abroad.

• Operations to Facilitate Specific Businesses Promotion

Pursuant to the Bill on the Promotion of Businesses to Develop and Manufacture Energy and Environmentally Friendly Products (Law No. 38 of 2010), JFC commenced the “Operations to Facilitate Specific Businesses Promotion” beginning on August 16, 2010. Through this operation, JFC provides low-interest, long-term financing (two-step loans) for companies that develop or manufacture energy and environmentally friendly products, including electric vehicles, storage batteries, photovoltaic panels etc.

In response to the damage caused by the massive earthquake and tsunami off the pacific coast of northeastern Japan on March 11, 2011, the domestic lending business of JFC has since implemented certain relief measures for those impacted, including, among other things, increasing lending limits and offering of lower interest rates by the Micro Business and Individual Unit, Agriculture, Forestry, Fisheries and Food Business Unit and the Small and Medium Enterprise Unit, for a limited period. As of June 30, 2011, JFC had provided ¥527.1 billion of loans in response to the earthquake and its aftermath. On July 4, 2011, JFC issued new shares of its common stock by allotment to the Japanese government, in the aggregate amount of ¥548,587 million, the proceeds of which will be allocated mainly to JFC’s various domestic operations in response to the earthquake and its aftermath.

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CAPITALIZATION

The capitalization of JFC as of March 31, 2011 was as follows:

	As of March 31, 2011
	(millions of yen)
Borrowings	¥	22,036,903
Short-term Bonds payable		—
Bonds payable		5,670,825
Total Borrowings (Note 1)		27,707,729
Capital and Reserves:
Capital Stock		3,352,547
Capital Surplus		2,007,351
Special reserve for administrative improvement funds		181,500
Legal capital surplus		1,825,851
Retained earnings		(1,126,453	)
Legal retained earnings		745,412
Other retained earnings		(1,871,865	)
Total shareholders’ equity		4,233,444
Total Capitalization	¥	31,941,173

Notes:

(1) Includes current maturities

The capitalization of JBIC as of March 31, 2011 was as follows:

	As of March 31, 2011
	(millions of yen)
Borrowings	¥	5,502,495
Short-term Bonds payable		—
Bonds payable		2,703,551
Total Borrowings (Note 1)		8,206,046
Capital and Reserves:
Capital Stock		1,091,000
Capital Surplus		—
Special reserve for administrative improvement funds		—
Legal capital surplus		—
Retained earnings		801,398
Legal retained earnings		742,615
Other retained earnings		58,783
Total shareholders’ equity		1,892,398
Total Capitalization	¥	10,098,444

Notes:

(1) Includes current maturities

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OPERATING RESULTS FOR THE FISCAL YEAR ENDED MARCH 31, 2011

Overall Operations

Set forth below are the operating results of the JBIC Operations, the Financial Operations for Facilitating Realignment of United States Forces in Japan and the Domestic Financial Operations for the fiscal year ended March 31, 2011:

	(In millions of yen)
					Domestic Financial Operations
	JBIC Operations		Financial Operations for Facilitating Realignment of United States Forces in Japan		Micro Business and Individual Operations			Agriculture, Forestry, Fisheries and Food Business Operations			SME Loan Programs and Securitization support Programs (Guarantee-type Operation)
Ordinary Income	¥	197,217	¥	411	¥	161,987		¥	73,321		¥	124,973
Ordinary Profit/Losses		49,641		241		(48,871	)		1,208			(44,628	)
Net Income/Losses		58,783		241		(54,848	)		(141	)		(49,727	)
Total Assets		12,781,643		360		7,199,339			2,637,650			6,099,356
Loans and Bills Discounted		8,376,794		—		7,162,022			2,548,718			6,164,738
Acceptances and Guarantees		2,443,266		—		—			724			282

	Domestic Financial Operations											Adjustment among accounts			JFC Total
	Securitization Support Programs (Purchase-type Operation)		Credit Insurance Programs			Operations to Facilitate Crisis Responses			Operations to Facilitate Specific Businesses Promotion
Ordinary Income	¥	423	¥	151,365		¥	58,794		¥	13		¥	(402	)	¥	768,105
Ordinary Profit/Losses		194		(813,106	)		(29,464	)		(16	)		(9,205	)		(875,599	)
Net Income/Losses		683		(812,011	)		(29,464	)		(16	)		—			(886,503	)
Total Assets		25,957		2,835,575			5,190,325			20,137			(479	)		36,789,867
Loans and Bills Discounted		—		—			4,736,957			20,000			—			29,009,231
Acceptances and Guarantees		2,654		—			—			—			—			2,446,928

JFC’s ordinary income for the fiscal year ended March 31, 2011 was ¥768.1 billion yen. This was attributable primarily to interest income including interest on loans and discounts, which amounted to ¥554.0 billion, to insurance premiums, which amounted to ¥147.8 billion, and to receipts from the national budget, which amounted to ¥43.1 billion.

JFC’s ordinary expenses for the fiscal year ended March 31, 2011 was ¥1,643.7 billion. This was attributable primarily to expenses on insurance claims amounting to ¥723.1 billion, provision of reserve for insurance policy liabilities amounting to ¥371.1 billion, interest expense, including interest on borrowings and bonds, amounting to ¥322.7 billion, general and administrative expenses amounting to ¥132.9 billion, provision of allowance for loan losses amounting to ¥162.4 billion, and provision of reserve for compensation losses amounting to ¥27.9 billion. JFC recorded ordinary loss of ¥875.5 billion for the fiscal year ended March 31, 2011.

For the fiscal year ended March 31, 2011, JFC incurred a net loss of ¥886.5 billion.

JBIC Operations

The ordinary income of the JBIC Operations for the fiscal year ended March 31, 2011 was ¥197.2 billion. This was attributable primarily to interest income which amounted to ¥178.6 billion, reflecting temporary measures undertaken in response to the overseas development and acquisition support of material resources and JBIC’s commitments to Emergency Projects to Support Overseas Operations.

The ordinary expenses of the JBIC Operations for the fiscal year ended March 31, 2011 was ¥147.5 billion. This was attributable primarily to interest expenses, amounting to ¥118.7 billion, which mostly reflected interest expenses for borrowings.

For the fiscal year ended March 31, 2011, JFC recorded ordinary profit of ¥49.6 billion and net income of ¥58.7 billion for the JBIC Operations.

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Set forth below are the operating results of the JBIC Operations and the Domestic Financial Operations for the fiscal year ended March 31, 2010:

	(In millions of yen)
	JBIC Operations		Domestic Financial Operations
			Micro Business and Individual Operations			Agriculture, Forestry, Fisheries and Food Business Operations			SME Loan Programs and Securitization Support Programs (Guarantee-type Operation)
Ordinary Income	¥	191,178	¥	169,007		¥	72,277		¥	125,359
Ordinary Profit/Losses		27,823		(49,237	)		(1,831	)		(10,010	)
Net Income/Losses		33,207		(50,098	)		0			(10,250	)
Total Assets		11,866,899		7,200,351			2,739,242			5,969,993
Loans and Bills Discounted		8,771,342		7,141,568			2,647,339			5,958,595
Acceptances and Guarantees		1,977,071		—			395			16,508

	Domestic Financial Operations									Adjustment among accounts			JFC Total
	Securitization Support Programs (Purchase-type Operation)			Credit Insurance Programs			Operations to Facilitate Crisis Responses
Ordinary Income	¥	444		¥	159,918		¥	33,355		¥	(461	)	¥	751,079
Ordinary Profit/Losses		(1,186	)		(998,800	)		(85,510	)		—			(1,118,754	)
Net Income/Losses		(1,186	)		(999,052	)		(85,510	)		—			(1,112,890	)
Total Assets		23,904			2,674,717			5,159,153			(52	)		35,634,209
Loans and Bills Discounted		—			—			4,659,746			—			29,178,591
Acceptances and Guarantees		—			—			—			—			1,993,974

JFC’s ordinary income for the fiscal year ended March 31, 2010 was ¥751.0 billion yen. This was attributable primarily to interest income including interest on loans and discounts, which amounted to ¥543.7 billion, to insurance premiums, which amounted to ¥156.5 billion, and to receipts from the national budget, which amounted to ¥36.0 billion.

JFC’s ordinary expenses for the fiscal year ended March 31, 2010 was ¥1,869.8 billion. This was attributable primarily to expenses on insurance claims amounting to ¥869.5 billion, provision of reserve for insurance policy liabilities amounting to ¥421.6 billion, interest expense, including interest on borrowings and bonds, amounting to ¥321.5 billion, general and administrative expenses amounting ¥133.0 billion, provision of allowance for loan losses amounting to ¥149.1 billion, and provision of reserve for compensation losses amounting to ¥84.3 billion. JFC recorded ordinary loss of ¥1,118.7 billion for the fiscal year ended March 31, 2010.

For the fiscal year ended March 31, 2010, JFC incurred a net loss of ¥1,112.8 billion.

JBIC Operations

The ordinary income of the JBIC Operations for the fiscal year ended March 31, 2010 was ¥191.1 billion. This was attributable primarily to interest income which amounted to ¥179.3 billion, reflecting temporary measures undertaken in response to the global financial crisis, such as JBIC’s commitments to Emergency Projects to Support Overseas Operations.

The ordinary expenses of the JBIC Operations for the fiscal year ended March 31, 2010 was ¥163.3 billion. This was attributable primarily to interest expenses, amounting to ¥122.3 billion, which mostly reflected interest expenses for borrowings.

For the fiscal year ended March 31, 2010, JFC recorded ordinary profit of ¥27.8 billion and net income of ¥33.2 billion for the JBIC Operations.

8

BUSINESS

Missions

The JFC Act provides that JFC’s purpose is to contribute to the sound development of Japan and the international economy and society and to the improvement of the quality of national life, by taking responsibility for (i) the financial function to provide fund procurement assistance to the general public, small and medium enterprises and those engaged in agriculture, forestry and fishery and (ii) the financial function to promote overseas development and securement of resources which are important for Japan and to maintain and improve the international competitiveness of Japanese industries and to promote the overseas business having the purpose of preserving the global environment, such as preventing global warming, also providing (iii) the financial services which are necessary to take appropriate measures with respect to disruptions to domestic or international financial order or damages caused by large-scale natural disasters, acts of terrorism, medical epidemics, etc., and furthermore enabling financial institutions, such as banks, to provide such necessary financial services in a timely and smooth manner, while having the objective of supplementing the financial transactions implemented by ordinary financial institutions.

Government Control and Supervision

The JFC Act requires the Japanese Government, at all times, to hold all of the outstanding shares of JFC. JFC’s operations, including appointment of directors, business plans and issuance of new debt securities, are subject to the supervision of the Minister of Finance, Minister of Health, Labor and Welfare, Minister of Economy, Trade and Industry, and Minister of Agriculture, Forestry and Fisheries in accordance with Article 64 of the JFC Act, and the Financial Operations for Facilitating Realignment of United States Forces in Japan are subject to the supervision of the Minister of Finance and the Minister of Defense in accordance with Article 22 of the Act on Special Measures Concerning Smooth Implementation of Realignment of United States Forces in Japan. The Government Agencies Budget, which the Minister of Finance formulates and which is subject to approval by the Diet, includes JFC’s annual budget of revenues and expenditures.

Overview of JFC’s Operations

Under the JFC Act, JFC conducts the JBIC Operations, the Financial Operations for Facilitating Realignment of United States Forces in Japan and the Domestic Financial Operations separately from one another. For budget and accounting purposes, the JFC Act, the Act on Special Measures Concerning Smooth Implementation of Realignment of United States Forces in Japan and the Bill on the Promotion of Businesses to Develop and Manufacture Energy and Environmentally Friendly Products sets forth nine separate accounts, two of which relates to JBIC’s Operations and the other seven of which relate to the Domestic Financial Operations. The JFC Act, the Act on Special Measures Concerning Smooth Implementation of Realignment of United States Forces in Japan and the Bill on the Promotion of Businesses to Develop and Manufacture Energy and Environmentally Friendly Products contemplates that each of these nine accounts is to be administered separately from one another, and generally a transfer of funds from one account to another is not permitted. The JFC Act, the Act on Special Measures Concerning Smooth Implementation of Realignment of United States Forces in Japan and the Bill on the Promotion of Businesses to Develop and Manufacture Energy and Environmentally Friendly Products further provides that our capital and reserves as well as appropriation of earnings are to be separately accounted for each of the nine accounts.

In terms of financing activities, JFC makes borrowings and issues debt securities for specific account(s). Proceeds from such borrowings or debt securities issuances are applied only to the specified account(s). Also, funds for interest and principal payments for such indebtedness are provided only from the specified account(s), and funds from other accounts cannot, in principal, be applied to such payments.

The account for JBIC Operations is required to conduct sound and efficient operations based on the following two principles: that repayments from the loans and the performance of the obligations under the guarantees should be ascertained (“certainty of repayment”) and that expenditures should not exceed revenues (“sufficient revenues to cover expenditures”) according to the JFC Act.

According to the Structural Plan for Policy Based Finance Reform, dated June 27, 2006, which was decided by the Headquarters for the Promotion of Policy-Based Finance Reform and the Headquarters for the Promotion of Administrative Reform, both of which were established by Cabinet Decisions pursuant to Japanese law, there has been the recognition that the operations of the Other Predecessors, which now constitute the Domestic Financial Operations, (i) received certain amounts of financial assistance from the government and had levels of equity capital ratio that were relatively lower than that of the Predecessor’s operations (now the JBIC Operations), and (ii) procured nearly all of their funds from the domestic market and did not necessarily need to be recognized in the international market. With respect to the Domestic Financial Operations, when the JFC Act was enacted, the two houses of the Japanese Diet passed accompanying resolutions stating that such domestic operations needed to appropriately meet the financing needs of the general public, persons engaged in small and medium enterprises and persons engaged in agriculture, forestry and fishery, and that necessary and sufficient fiscal and other measures would be provided for that purpose.

Overview of JBIC’s Operations

Outstanding Loans in the JBIC Operations

JBIC’s total commitments for the year ended March 31, 2011 amounted to ¥1,128 billion, and the outstanding balance as of March 31, 2011 was ¥8,467 billion.

9

The following table sets forth, as of the dates indicated, the total amounts of loans outstanding provided by JBIC, by type of credit and geographical distribution:

Loans Outstanding by Type of Credit and Geographical Distribution of the JBIC Operations

	JBIC Operations				JBIC Operations
	As of March 31,				As of March 31,
	2010				2011
	(In millions of yen)				(In millions of yen)
EXPORT LOANS
Asia	¥	441,044	5.0	%	¥	379,675	4.5	%
The Pacific		—	—			—	—
Europe		71,853	0.8	%		66,604	0.8	%
The Middle East		159,034	1.8	%		136,152	1.6	%
Africa		44,635	0.5	%		34,112	0.4	%
North America		—	—			—	—
Latin America		88,857	1.0	%		78,925	1.0	%
International Organizations, etc.		2,809	0.0	%		3,040	0.0	%
Total	¥	808,231	9.2	%		698,507	8.3	%
IMPORT LOANS
Asia		23,396	0.3	%		25,289	0.3	%
The Pacific		77,579	0.9	%		64,807	0.8	%
Europe		20,128	0.2	%		15,996	0.2	%
The Middle East		441,786	5.0	%		366,226	4.3	%
Africa		4,777	0.1	%		2,844	0.0	%
North America		210,999	2.4	%		142,147	1.7	%
Latin America		14,617	0.2	%		13,261	0.2	%
International Organizations, etc.		5	0.0	%		—	—
Total		793,287	9.0	%		630,570	7.5	%
OVERSEAS INVESTMENT LOANS
Asia		1,157,372	13.1	%		1,059,775	12.5	%
The Pacific		287,050	3.3	%		302,665	3.6	%
Europe		1,100,822	12.5	%		931,618	11.0	%
The Middle East		1,086,085	12.3	%		1,047,916	12.4	%
Africa		142,532	1.6	%		138,053	1.6	%
North America		512,778	5.8	%		430,471	5.1	%
Latin America		827,617	9.4	%		934,209	11.0	%
International Organizations, etc.		672,124	7.6	%		982,497	11.6	%
Total		5,786,381	65.6	%		5,827,203	68.8	%
UNTIED LOANS
Asia		569,795	6.5	%		518,711	6.1	%
The Pacific		141	0.0	%		94	0.0	%
Europe		56,496	0.6	%		45,261	0.5	%
The Middle East		46,921	0.5	%		49,530	0.6	%
Africa		39,430	0.4	%		47,094	0.6	%
North America		—	—			—	—
Latin America		385,569	4.4	%		345,229	4.1	%
International Organizations, etc.		235,557	2.7	%		177,873	2.1	%
Total		1,333,909	15.1	%		1,183,793	14.0	%
GOVERNMENTAL LOANS
Asia		16,011	0.2	%		15,938	0.2	%
The Pacific		—	—			—	—
Europe		1,099	0.0	%		2,036	0.0	%
The Middle East		19,037	0.2	%		19,071	0.2	%
Africa		3,226	0.0	%		6,517	0.1	%
North America		—	—			—	—
Latin America		12,622	0.1	%		10,777	0.1	%
International Organizations, etc.		—	—			—	—
Total		51,996	0.6	%		54,339	0.6	%
INVESTMENTS
Asia		11,039	0.1	%		10,957	0.1	%
The Pacific		—	—			—	—
Europe		—	—			—	—
The Middle East		—	—			—	—
Africa		—	—			—	—
North America		4,811	0.1	%		4,811	0.1	%
Latin America		—	—			—	—
International Organizations, etc.		28,442	0.3	%		56,898	0.7	%
Total		44,293	0.5	%		72,666	0.9	%
Total loans outstanding	¥	8,818,096	100.0	%	¥	8,467,079	100.0	%

10

The following table sets forth the new loan commitments made by JBIC, by type of credit and geographical distribution in accordance with JBIC’s system of classification for the periods indicated.

Credit Commitments by Type of Credit and Geographical Distribution of the JBIC Operations

	JBIC Operations				JBIC Operations
	As of March 31,				As of March 31,
	2010				2011
	(In millions of yen)				(In millions of yen)
EXPORT LOANS
Asia	¥	69,884	2.6	%	¥	34,510	3.1	%
The Pacific		—	—			—	—
Europe		5,552	0.2	%		14,637	1.3	%
The Middle East		1,566	0.1	%		20,768	1.8	%
Africa		—	—			66,389	5.9	%
North America		—	—			—	—
Latin America		20,877	0.8	%		11,652	1.0	%
International Organizations, etc.		—	—			3,283	0.3	%
Total		97,879	3.7	%		151,239	13.4	%
IMPORT LOANS
Asia		8,208	0.3	%		—	—
The Pacific		—	—			—	—
Europe		—	—			—	—
The Middle East		—	—			169,512	15.0	%
Africa		—	—			—	—
North America		—	—			—	—
Latin America		—	—			—	—
International Organizations, etc.		—	—			—	—
Total		8,208	0.3	%		169,512	15.0	%
OVERSEAS INVESTMENT LOANS
Asia		288,246	10.8	%		48,231	4.3	%
The Pacific		175,438	6.6	%		8,384	0.7	%
Europe		474,858	17.9	%		47,847	4.2	%
The Middle East		101,133	3.8	%		—	—
Africa		12,248	0.5	%		—	—
North America		288,354	10.9	%		74,644	6.6	%
Latin America		191,376	7.2	%		149,261	13.2	%
International Organizations, etc.		662,078	24.9	%		381,962	33.9	%
Total		2,193,731	82.6	%		710,329	63.0	%
UNTIED LOANS
Asia		271,094	10.2	%		18,283	1.6	%
The Pacific		—	—			—	—
Europe		—	—			—	—
The Middle East		—	—			19,969	1.8	%
Africa		13,532	0.5	%		—	—
North America		—	—			—	—
Latin America		50,532	1.9	%		23,684	2.1	%
International Organizations, etc.		9,160	0.3	%		14,909	1.3	%
Total		344,317	13.0	%		76,846	6.8	%
GOVERNMENTAL LOANS
Asia		—	—			—	—
The Pacific		—	—			—	—
Europe		—	—			—	—
The Middle East		—	—			—	—
Africa		—	—			—	—
North America		—	—			—	—
Latin America		—	—			—	—
International Organizations, etc.		—	—			—	—
Total		—	—			—	—
INVESTMENTS
Asia		—	—			3,055	0.3	%
The Pacific		—	—			—	—
Europe		—	—			—	—
The Middle East		—	—			—	—
Africa		—	—			—	—
North America		—	—			—	—
Latin America		—	—			—	—
International Organizations, etc.		13,040	0.5	%		16,764	1.5	%
Total		13,040	0.5	%		19,819	1.8	%
Total loans outstanding	¥	2,657,175	100.0	%	¥	1,127,744	100.0	%

11

Loan and Guarantee Terms of the JBIC Operations

The JFC Act provides that the JBIC’s interest rates and guarantee charges shall be determined in light of the interest rates and commissions charged for guarantees by private banks on a basis such that the revenues of the JBIC Operations will cover its expenditures and losses. In addition, JBIC may not compete with private financial institutions in extending loans and guarantees, and may extend loans and guarantees only if financing by private financial institutions on ordinary terms is deemed difficult. JBIC carefully investigates the financial position of each prospective borrower and the technical and financial aspects of the project to be financed, and a loan or guarantee is extended only if there is reasonable assurance of repayment.

JBIC itself determines the interest rates, maturities, loan participation percentages, security and other terms on which it lends its funds or extends its guarantees. The interest rate to be applied to each loan is set by the President & CEO of the JBIC, taking into consideration JBIC’s funding cost and the rate for borrowers of the highest credit standing from private banks extending long-term loans.

Most of the JBIC Operations involve the financing of projects in cooperation with private financial institutions. Loans extended to domestic borrowers are usually secured by a bank guarantee, a mortgage or other collateral, or supported by a covenant requiring the borrower to provide security to JBIC at its request. Overseas direct loans, which are usually extended to banks, governmental institutions in foreign countries or private companies with Japanese capital, are generally secured by guarantees issued by the foreign government or the foreign governmental financial institution, by securities issued by Japanese domestic companies, or by cash flow and other assets of the borrower taken as security by JBIC.

In addition to the loan terms provided in the JFC Act, JBIC’s terms and conditions for export loans are determined, in the case of plant and equipment exports, in accordance with the OECD’s “Arrangement on Guidelines for Officially Supported Export Credits”, commonly referred to as the Consensus and, in the case of ship exports, the OECD’s “Understanding on Export Credits for Ships”, commonly referred to as the Understanding. The Consensus and the Understanding, which were established to avoid excessive competition in the area of financing for plant or ship exports, stipulate minimum interest rates, maximum credit terms and minimum down payments for officially supported medium-and long-term export credit.

The following table sets forth information concerning the balances of JBIC’s outstanding loans as of March 31, 2010 and 2011.

Loan Balances of the JBIC Operations by Remainder of Term⁽¹⁾

	As of March 31, 2010				As of March 31, 2011
	(In billions of yen)				(In billions of yen)
One year or less	¥	815	9.6	%	¥	1,078	13.0	%
More than 1 to 2 years		1,187	14.0	%		1,189	14.4	%
More than 2 years to 3 years		1,182	13.9	%		780	9.4	%
More than 3 years to 4 years		804	9.4	%		1,307	15.8	%
More than 4 years to 5 years		1,346	15.8	%		968	11.7	%
More than 5 years to 6 years		553	6.5	%		520	6.3	%
More than 6 years to 7 years		494	5.8	%		430	5.2	%
More than 7 years to 8 years		395	4.6	%		409	5.0	%
More than 8 years to 9 years		380	4.5	%		375	4.5	%
More than 9 years to 10 years		335	3.9	%		296	3.6	%
More than 10 years		1,020	12.0	%		910	11.0	%
Total	¥	8,512	100.0	%	¥	8,267	100.0	%

(1) The amounts do not include principal that is overdue and unpaid, and principal that may possibly be waived according to the “Changes in Debt Relief Method” announced by Government of Japan in December 2002.

12

Allowance for Loan Losses of the JBIC Operations

JBIC provides an allowance for possible loan losses, pursuant to the relevant cabinet order and related regulations. Reversal of allowance for loan losses, in the fiscal year ended March 31, 2011, amounts to ¥8,715 million.

For the fiscal year ended March 31, 2011, JBIC wrote off ¥8,232 million of its loan, but did not devalue securities.

In cases where borrowers indicate that they may be unable to meet payments on their loans, JBIC may revise the terms of repayment. In the case of direct loans to foreign governments, the international system provides several mechanisms and institutions through which countries facing repayment difficulties can effect remedial measures in agreement with their creditors (Paris Club rescheduling). Therefore, rescheduled principal and interest payments may have to be accepted in order to facilitate the collectability of some loans or portions of loans. Should a default occur in the payment of principal or interest (whether by reason of a failure to agree on modified loan terms or otherwise), JBIC considers the related loan to be in arrears immediately to the extent of the defaulted amount.

Sources of Funds of the JBIC Operations

The following table sets forth information concerning the sources of funds for the JBIC Operations during the fiscal year ended March 31, 2011.

Sources of Funds of the JBIC Operations

	Year ended March 31,
	2011
	(In millions of yen)
Borrowings from the Government Fund for Fiscal Investment and Loan Program(1)	¥	690,900
Borrowings from the Foreign Exchange Fund Special Account		324,285
Bonds and Notes with the Government Guarantee(2)		436,158
Bonds and Notes without the Government Guarantee		50,000

(1) Includes both short-term and long-term borrowings.

(2) Guaranteed by the Government except for the Fiscal Investment and Loan Program Agency Bond.

The Predecessor and JFC have raised funds for the Predecessor’s international financial account and the JBIC Operations through borrowings from Government of Japan and issuances of Japanese Government-guaranteed bonds and notes in international markets. In accordance with the government’s policy to reform the Fiscal Investment and Loan Program (“FILP”), the Predecessor began to raise funds in the Japanese domestic capital market on its own creditworthiness, starting in the fiscal year ended March 31, 2002. JFC issued bonds with a guarantee from the Government of Japan in the aggregate amount of $6.75 billion and ¥805 billion, and bonds without a guarantee from the Government of Japan in the aggregate amount of ¥186 billion in the fiscal year ended March 31, 2010. JFC issued bonds with a guarantee from the Government of Japan in the aggregate amount of $5.25 billion and ¥200 billion, and bonds without a guarantee from the Government of Japan in the aggregate amount of ¥325 billion in the fiscal year ended March 31, 2011.

13

Capital of the JBIC Operations, the Financial Operations for Facilitating Realignment of United States Forces in Japan and the Domestic Financial Operations

The following table sets forth information concerning the account total assets and equity at the end of the fiscal year ended March 31, 2011.

	(In millions of yen)
	JBIC Operations						Domestic Financial Operations
				Financial Operations  for Facilitating Realignment of United States Forces in Japan			Micro Business and Individual Operations			Agriculture, Forestry, Fisheries and Food Business Operations			SME Loan Programs and Securitization Support  Programs (Guarantee-type Operation)
Total Assets	¥	12,781,643		¥	360		¥	7,199,339		¥	2,637,650		¥	6,099,356
Net Assets		2,048,513			241			222,590			328,055			365,815
Capital Stock		1,091,000			—			637,848			325,400			768,035
Capital Surplus		—			—			181,500			—			—
Retained Earnings		801,398			241			(596,757	)		2,655			(402,219	)
Net Assets /Total Assets		16.03	%		66.94	%		3.09	%		12.44	%		6.00	%
	Domestic Financial Operations												JFC Total
	Securitization Support Programs (Purchase-type Operation)			Credit Insurance Programs			Operations to Facilitate Crisis Responses			Operations to Facilitate Specific Businesses Promotion
Total Assets	¥	25,957		¥	2,835,575		¥	5,190,325		¥	20,137		¥	36,789,867
Net Assets		23,235			1,013,839			387,165			103			4,389,560
Capital Stock		24,476			—			505,668			120			3,352,547
Capital Surplus		—			1,825,851			—			—			2,007,351
Retained Earnings		(1,240	)		(812,011	)		(118,502	)		(16	)		(1,126,453	)
Net Assets /Total Assets		89.51	%		35.75	%		7.46	%		0.51	%		11.93	%

BIS based capital adequacy ratio for the JBIC Operations at the end of the fiscal year ended March 31, 2011 are set forth in the table below.

	2011 Total
	(In millions of yen)
Core Capital (Tier I)(A)	¥	1,861,341
Supplementary Capital (Tier II) (B)		30,038
Exclusion (C)		—
Total Capital (A)+(B)-(C) (D)		1,891,379
Risk Assets, etc (E)		8,909,815
Total Capital Ratio (D)/(E)		21.22	%
Tier I Ratio (A)/(E)		20.89	%

Non-performing Loans

JFC assessed its loans and other credits in accordance with disclosure requirements that are based, in all material respects, on two sets of disclosure regulations that are followed by commercial financial institutions in Japan, although JFC is not required to follow either set of regulations. The first set of disclosure regulations includes those set forth under the Banking Law of 1981, as amended (the “Banking Law”). The Banking Law standards require “Risk-monitored Loans” to be disclosed in four categories: (1) bankrupt loans, (2) non-accrual loans, (3) “Loans with interest or principal repayments more than three months in arrears”, and (4) restructured loans. The loan categories can be described in greater detail as follows:

(1) “Bankrupt loans” are loans, defined in Article 96, Paragraph 1, Item 3 and 4 of the corporate Tax Law Enforcement Ordinance (Government Ordinance No.97), on which accrued interest income is not recognized as there is substantial uncertainty over the ultimate collectability of either principal or interest because they have been in arrears for a considerable period of time or for another reason.

14

(2) “Non-accrual loans” are loans on which accrued interest income is not recognized, although this excludes loans on which interest payments are deferred in order to support the borrowers’ recovery from financial difficulties.

(3) “Loans with interest or principal repayments more than three months in arrears” are loans whose principal or interest payment is more than three months in arrears, and which do not fall under category of “Bankrupt loans” and “Non-accrual loans”

(4) “Restructured loans” are loans whose repayment terms and conditions have been amended in favor of the borrowers (e.g. reduction of or exemption from the stated interest rate, the deferral of interest payments, the extension of principal repayments or renunciation of claims) in order to support the borrowers’ recovery from financial difficulties, and which do not fall under the category of “Bankrupt loans”, “Non-accrual loans”, and “Loans with interest or principal payments more than three months in arrears”.

The amounts of loans indicated in the table below are the gross amounts prior to the deduction of allowance for possible loan losses.

The following table sets forth the results of JFC’s assessment of its loans according to the Banking Law standards as of March 31, 2011:

Principal Amount of Non-Performing Loans

Calculated and Disclosed under the Banking Law

	(In millions of yen)
	As of March 31, 2011
	Account for Micro Business and Individual Operations		Account for Agriculture, Forestry, Fisheries and Food  Business Operations		Account for SME Loan Programs and Securitization Support Programs (Guarantee-type Operation)		Account for JBIC Operations
Bankrupt loans	¥	35,305	¥	1,568	¥	22,488	¥	8,969
Non-accrual loans		136,178		82,436		358,787		97,717
Loans with interest or principal repayments more than three months on arrears		85		2,930		—		—
Restructured loans		570,268		13,553		47,450		187,046
Total	¥	741,837	¥	100,488	¥	428,727	¥	293,733

In addition, JFC has assessed its loans and other assets in accordance with disclosure requirements that are based, in all material respects, on the requirements set forth in the Law on Emergency Measures for the Revitalization of the Functions of the Financial System of 1998, as amended (the “Financial Revitalization Law”). The Financial Revitalization Law requires that problem assets be categorized in three categories: (1) bankrupt and quasi-bankrupt assets, (2) doubtful assets and (3) substandard loans, which may be described more fully as follows:

(1) “Bankrupt and quasi-bankrupt assets” are loans to and other credits to debtors which have begun proceedings under the Bankruptcy Law, the Corporate Reorganization Law, the Financial Revitalization Law or other similar laws of Japan and have financially failed, as well as similar loans as so designated.

(2) “Doubtful Assets” are loans to and other credits to debtors whose financial and operational conditions have been deteriorated and which are unlikely to make payment of principal and/or interest on a contractual basis.

(3) “Substandard loans” are (a) “Past due loans (three months or more)” for which principal and/or interest is past due three months or more from the date following the scheduled payment date excluding “Bankrupt and quasi-bankrupt assets” and “Doubtful assets”, and (b) restructured loans on which JFC granted concessions to borrowers in financial difficulties to assist them in their financial recovery and eventually be able to pay to creditors, but exclude “Bankrupt and quasi-bankrupt assets”, “Doubtful assets” and “Past due loans (three months or more)”.

The following table sets forth the result of JFC’s assessment of its loan portfolio according to the Financial Revitalization Law standards as of March 31, 2011:

Problem Assets

Calculated and Disclosed under Financial Revitalization Law

	(In millions of yen)
	As of March 31, 2011
	Account for Micro Business and Individual Operations		Account for Agriculture, Forestry, Fisheries and Food Business Operations		Account for SME Loan Programs and Securitization Support Programs (Guarantee-type Operation)		Account for JBIC Operations
Bankrupt and quasi-bankrupt assets	¥	116,943	¥	6,708	¥	68,727	¥	8,969
Doubtful Assets		55,371		77,344		312,892		97,717
Substandard loans		570,353		16,483		47,450		187,046
Total	¥	742,668	¥	100,536	¥	429,070	¥	293,733

In the event that a debtor country is temporarily unable to repay its external public debt (debts to creditors that are public institutions such as central governments, trade insurance agencies and export credit agencies) due to a decline in its balance of payments, meetings of creditor countries (the “Paris Club”) may be held to discuss debt relief measures. When creditor countries agree on debt relief measures, debt rescheduling agreements between the creditors and a debtor are agreed, and repayments are made according to the agreements. During this temporary liquidity assistance effort, the debtor country implements an economic reform program pursuant to an agreement with the IMF and continues repayments of its debts. The principal amount of loans as of March 31, 2011, for which JFC agreed to provide debt relief in the JBIC Operations pursuant to the Paris Club agreements was ¥287,295 million on the JBIC Operations.

In the past, the Predecessor had not categorized the loans rescheduled under the Paris Club agreements, described above, under “Restructured loans.” This practice was based on the assumption that, unlike loans provided by private financial institutions, the Predecessor’s loans, as loans from a public creditor, benefit from an asset securing mechanism under the international framework which accords a high probability of repayment. However, in order to facilitate comparison with private financial institutions, effective from the fiscal year ended March 31, 2005, JFC now classifies its loans in the JBIC Operations rescheduled under the Paris Club made to borrowers classified under the Banking Law self assessment as “Watchlisted”, but not “Past due loans (3 months or more)”, as “Restructured loans”. The amount of such loans as of March 31, 2011, included in “Restructured loans” in the above table, is ¥85,706 million attributable to the JBIC Operations, of which ¥84,934 million represents original principal.

Risk Management– General

JFC, in order to ensure uninterrupted and stable execution of its policy finance functions, deals with risks it faces in a comprehensive manner and seeks to manage them appropriately. JFC devotes significant resources to strengthening its risk management policies and procedures. However, it is not possible through such policies and procedures to predict, identify and effectively manage each and every risk that might arise in connection with those operations. To the extent that risks arise in connection with those operations that cannot be effectively managed under such policies and procedures, JFC’s financial condition and results of operations could be materially and adversely affected.

JFC manages the following types of risks:

• Credit risk

Credit risk refers to risk of losses arising from a decrease in or disappearance of the value of an asset (including off-balance sheet assets), due to deterioration in creditworthiness or default of the entity to which credit is granted.

• Credit insurance underwriting risks

Credit insurance underwriting risk refers to risk of losses due to movements in the loss incurrence and recovery rates with respect to loans granted to SMEs under the Credit Insurance Programs that were not anticipated at the time the relevant insurance premiums were set.

• Market risk

Market risk refers to risk of losses arising from a loss in the value of an asset (including off-balance sheet assets) resulting from changes in market prices, rates, indices, volatilities, correlations or other market factors, such as interest rates, currency exchange rates and stock prices.

16

• Liquidity risk

Liquidity risk refers to the potential inability to meet financial obligations as they become due. This risk could arise from an inability to access the secured or unsecured debt markets, a deterioration in JFC’s credit ratings which could raise funding costs, a failure to manage unplanned changes in funding requirements, or a failure to liquidate assets quickly and with minimal loss in value.

• Operational risk

Operational risk refers to risk of losses arising from improper administration of operations, actions by employees or functioning of systems, or from external events that, for example, disrupt JFC’s operations, resulting in financial and other losses. JFC faces the following types of operational risk:

• Administrative risk – risk of losses resulting from a failure by an employee to properly discharge his or her administrative responsibilities, or accidents and improper actions committed by an employee.

• System risk – risk of losses resulting from a malfunction or other failures in JFC’s computer systems or improper use of such systems.

• Human risk – risk of losses resulting from improper employment, inappropriate workplace and safety conditions, loss of human resources, loss of morale, or insufficient education of employees.

• Legal risk – risk of losses resulting from violations of law or contracts, entering into improper contracts or incurrence of other legal liabilities.

• Tangible asset risk – risk of damage to tangible assets due to natural disasters or other events.

• Reputational risk – risk of losses due to loss of reputation or spread of rumors, resulting in a loss of other parties’ trust in JFC.

Each of JFC’ operations faces a different combination, as well as levels, of the above types of risks compared with the other operations. In light of this, JFC has established and maintains risk management policies and procedures that are administered at the level of each of its operations.

Risk Management – JBIC Operations

With respect to the JBIC Operations, JFC, acting under the name of JBIC, manages major risks in those operations as a policy-lending institution in the following manner.

Credit Risk

Managing credit risk

The basis of credit risk management is centered on individual credit management based on the creditworthiness of the borrower during the credit approval process.

When a new credit application is processed, the relevant finance departments (sales promotion department) and credit departments collect and analyze information on the borrower. The overseas representative offices also play a part in collecting information on foreign governments and corporations. Credit appraisal takes place based on the information that has been gathered and analyzed, with the different departments ensuring appropriate check throughout the process, leading to the final decision by the management.

For lending to foreign governments and corporations, JBIC makes most use of its position as a public institution and exchanges views and information with governments and other authorities in recipient countries, international institutions such as the IMF and the World Bank, other regional development banks and official export credit agencies as well as private financial institutions in the industrial countries. Using all these channels, JBIC evaluates sovereign or country risk (risk in addition to corporate risk associated with the country in which the corporation is located) based on a broad range of information on government and government agency borrowers as well as political and economic conditions in their countries.

For credit to domestic and foreign corporations, there is a need to evaluate their creditworthiness and the appropriateness of the collateral they provide. In particular, for credit related to projects overseas, credit evaluation involves checking the certainty of transactions to be financed, feasibility studies of projects and the industry in which the borrower operates.

17

Credit risk rating

JBIC has institutionalized its credit risk rating system that covers substantially all of its borrowers. JBIC uses its credit risk ratings for loan appraisals and to quantify its credit risks. Further, the credit risk rating system has been revised where necessary.

Asset self assessment

As part of its credit risk management, the Predecessor started asset self assessment during the year ended March 31, 2001. JBIC is undertaking self assessments, similar to Japanese private financial institutions, in accordance with the Financial Inspection Manuals prepared by the Financial Services Agency. In this process, JBIC, following the examples of private financial institutions, conducts first stage assessments by the relevant finance departments, second stage assessments by the credit and country economic analysis departments, and inspections by an independent auditing department. The results of asset self assessment are used for the disclosure of the quality of assets to enhance the transparency of JBIC’s financial position.

Quantifying credit risks

Besides the individual credit management outlined above, credit risks are quantified to assess the overall risk of the portfolio in these operations. To quantify credit risks, it is important to take into account the characteristic of the loan portfolio, that there are a significant proportion of long-term loans and loans involving sovereign risk or country risk. Also to be taken into account is the mechanism of securing assets, such as the framework of international financial assistance to debtor countries through the Paris Club, which is unique to official creditors. This account uses a unique model to quantify the credit risk taking account of the above explained elements and measures amount of credit risk, which are utilized for credit risk management.

Market Risks

Exchange rate risk

Foreign currency-denominated loans conducted in these operations involve risks related to exchange rate fluctuations. We have a consistent policy of managing this risk by fully hedging this risk exposure through the use of currency swaps and forward foreign exchange transactions.

Interest rate risk

Interest rate risk arises from exposure to market interest rate fluctuations for yen-denominated loan and foreign currency-denominated loan operations and the policy for managing interest rate risk is described below.

 Yen-denominated loan operations

For the most part, funding for yen-denominated loans is managed at fixed-rate interest. Currently, interest rate risk for yen-denominated loans is limited since maturity of loans and the related funding arrangements are generally matched. In addition, swaps are used to hedge interest rate risk for portions of loans that are thought to have high exposures to interest rate fluctuation risk.

‚ Foreign currency-denominated loan operations

For foreign currency-denominated loan operations, interest rate risk is hedged through the consistent policy of using interest rate swaps and managing funds with floating interest rates for both loans and related funding arrangements.

Derivatives transactions

Policy for derivatives transactions

JBIC engages in derivative transactions solely for the purpose of hedging foreign exchange rate risks and interest rate risks associated with its lending and funding operations.

Transactions

Derivatives transactions of JBIC include interest rate and currency swaps and forward exchange contracts. The table below gives details of these transactions as of March 31, 2011.

18

Credit Risk Amounts of Derivatives, etc. for the JBIC Operations

	As of March 31, 2011
	Notional Amount*		Credit Risk
	(In billions of yen)
Interest Rate Swaps	¥	2,952	¥	85
Currency Swaps		3,600		1,156
Forward Exchange Contracts		0		0
Credit Risk Reductions through Netting		—		(57	)
Total	¥	6,554	¥	1,185

* The amounts indicated are maximum notional amounts to which JBIC may be exposed during the period since March 31, 2011 through the maturity date of the relevant derivative contract.

Risks involved in derivatives transactions and policies for addressing risks

Credit risk. Credit risk refers to potential losses from the failure of a counterparty to perform its obligations in accordance with the terms and conditions of the contract governing transactions due to bankruptcy or deteriorating business conditions.

JBIC constantly monitors the market value of derivatives transactions as to each counterparty and the amount of its credit exposure to and creditworthiness of each counterparty in order to ascertain the appropriateness of entering into or maintaining a transaction with each counterparty.

Liquidity Risk. Liquidity risk refers to the risk of cash flow tightening due to worsening fund-raising capability that arises from deterioration of creditworthiness or mismatches in the maturity of assets and liabilities. JBIC minimize liquidity risk through effective cash flow management and diversification of its funding sources. In addition, multiple financial institutions have established short-term credit lines with JBIC. JBIC borrows under the FILP and issues government-guaranteed bonds in the international capital markets for the JBIC Operation. The Predecessor started to issue bonds without a government guarantee in the domestic capital market in the fiscal year ended March 31, 2002.

Operational Risk. Operational risk refers to the potential loss from negligence or from accidents or misdeeds on the part of JBIC’s management and staff or from external events. JBIC minimize this risk by ensuring accurate operations through checks on the administrative process, creating operational manuals, improving training programs, and streamlining and computerizing procedures. In addition, the department which is in charge of internal auditing, inspects the administrative practices of the head office, Loan Departments, West Japan and overseas representative offices.

Computer System Risk. Computer system risk refers to the potential loss from a breakdown or malfunction in computer systems as well as from their misuse. With greater reliance on information systems, there is an increasing need to make the operations of JBIC smoother and more effective by exchanging information with Japanese firms as well as foreign governments through information networks. It is thus important to give greater weight to information management and staff with respect to internal information management and by putting in place measures to block illegal access to JBIC’s information systems from external sources by way of information networks. As part of an effort to ensure information security, JBIC drew up the Information Security Policy and created the Information Security Committee, consisting of the Executive Director in charge and heads of the relevant departments.

19

MANAGEMENT

JFC’s board of directors has the ultimate responsibility for the administration of its affairs. JFC’s articles of incorporation provide for a board of directors of not more than 22 directors and provide for not more than five corporate auditors. All directors and corporate auditors are elected by the Japanese government as JFC’s sole shareholder at the shareholder’s general meetings, but the election of each director and corporate auditor is subject to approval of the competent minister in accordance with the JFC Act. The normal term of office for directors is two years, and the normal term of office for corporate auditors is four years, but directors and corporate auditors may serve any number of consecutive terms. The board of directors may elect from among its members, a Governor, two Deputy Governors, several Senior Managing Directors and several Managing Directors. The Governor acts as the chairperson at the shareholder’s general meeting. One of the Deputy Governors (the “President & CEO, JBIC”) presides over the JBIC Operations. The board of directors also elects one or more representative directors from among its members, but such election is subject to the approval of the competent minister. Each of the Governor, Deputy Governor, President & CEO, JBIC and Senior Managing Directors (except Mr. Kazuhiko Bando) and one Managing Director (Mr. Fumio Hoshi) have the authority to represent JFC in the conduct of its affairs. The corporate auditors, or auditors, form the board of corporate auditors. The board of corporate auditors has a statutory duty to prepare and submit an audit report to the board of directors each year based on the audit reports issued by the individual corporate auditors that year. The board of corporate auditors is empowered to establish audit principles, the method of examination by the corporate auditors of JFC’s affairs and financial position and any other matters relating to the performance of the corporate auditors’ duties. JFC is required to appoint, and has appointed, independent auditors, who have the statutory duties of examining the financial statements, prepared on a basis consistent with accounting principles generally accepted in Japan, to be submitted to the shareholders by a representative director, and preparing their audit report thereon. JFC has selected its independent auditors to audit the financial statements ended March 31, 2011.

JFC’s current directors and corporate auditors as of June 22, 2011, are as follows:

Name	Title
Shosaku Yasui	Governor & CEO
Koichi Hosokawa	Deputy Governor
Hiroshi Watanabe	President & CEO, JBIC
Ryuhei Katsuno	Senior Managing Director
Masatoshi Sakano	Senior Managing Director
Yoshihiko Murase	Senior Managing Director
Kazuhiko Bando	Senior Managing Director
Fumio Hoshi	Managing Director (Deputy President, JBIC)
Yasutaka Tobita	Managing Director
Yoshio Nakamura	Managing Director
Masahiko Hara	Managing Director (Managing Director, JBIC)
Hiromi Minagawa	Managing Director
Kouzou Yamamoto	Managing Director
Masaharu Miyahara	Executive Director
Hiroo Motegi	Executive Director
Masami Yoshida	Executive Director
Kohei Nakanishi	Executive Director (Executive Director, JBIC)
Yasuhiro Mitsumasu	Executive Director
Yasushi Yamazaki	Executive Director
Masafumi Yamamoto	Executive Director
Sachiko Hayakawa	Executive Director
Hirofumi Miki	Executive Director
Katsufumi Nomura	Auditor
Jun Kanamori	Auditor
Toshio Ikeda	Auditor
Nobuko Takahashi	Auditor

20

DEBT RECORD

There has been no default in the payment of interest or principal on any obligation of JFC, the Predecessor or the Other Predecessors.

FINANCIAL STATEMENTS

JFC’s financial statements for the fiscal years ended March 31,2010 and 2011, prepared in accordance with accounting principles generally accepted in Japan (“Japan GAAP”), are included as Exhibit 2 to this Annual Report on Form 18-K filed with the Commission. Such financial statements have been audited by Ernst & Young ShinNihon LLC, independent auditors, as stated in their report accompanying such financial statements. Also, JBIC’s unaudited financial statements as of March 31, 2010 and 2011, also prepared in accordance with Japan GAAP, are included as Exhibit 4 to this Annual Report.

SUPPLEMENTAL INFORMATION

For supplemental information relating to the outstanding bonds of JFC, including those issued by the Predecessor and the Other Predecessors to which JFC succeeded, as of March 31, 2011, see Note 28 of the audited financial statements of JFC included as Exhibit 2 to this Annual Report on Form 18-K filed with the Commission.

21

EX-99.2

Exhibit 2

Report of Independent Auditors

The Board of Directors

Japan Finance Corporation

We have audited the accompanying balance sheets of Japan Finance Corporation as of March 31, 2011 and 2010, and the related statements of operations, changes in net assets, and cash flows for the years then ended, all expressed in yen. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Japan Finance Corporation at March 31, 2011 and 2010, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in Japan.

Supplemental Information

As described in Note 25, The Japan Bank for International Cooperation Act was passed on April 28, 2011. Based on this Act, on April 1, 2012, the Company’s Japan Bank for International Cooperation Operations and Financial Operations for Facilitating Realignment of United States Forces in Japan will be separated from the Company.

The U.S. dollar amounts in the accompanying financial statements with respect to the year ended March 31, 2011 are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in Note 1.

/s/ Ernst & Young ShinNihon LLC

June 22, 2011

- 1 -

[Japan Finance Corporation]

BALANCE SHEETS

		March 31, 2011			March 31, 2010			March 31, 2011
		In millions of yen			In millions of yen			In millions of U.S. dollars
Assets:
Cash and due from banks		¥	3,354,455		¥	3,734,767		$	40,342
Cash			197			236			2
Due from bank			3,354,257			3,734,531			40,340
Receivables under resale agreements	Note. 5		—			22,983			—
Securities	Note. 4		1,153,254			76,797			13,870
Government bonds			1,071,062			21,134			12,881
Corporate bonds			1,049			6,111			13
Stocks			2,030			2,030			24
Other securities			79,113			47,522			952
Loans and bills discounted	Note. 6		29,009,231			29,178,591			348,878
Loans on deeds			29,009,231			29,178,591			348,878
Other assets			1,059,184			771,262			12,738
Prepaid expenses			10,715			249			129
Accrued income			59,766			62,525			719
Derivatives other than for trading-assets			966,988			693,022			11,629
Agency accounts receivable			2,492			2,768			30
Other			19,221			12,695			231
Property, plant and equipment	Note. 8		254,083			282,008			3,056
Buildings			28,739			30,171			346
Land			104,352			246,787			1,255
Lease assets			3,752			3,940			45
Construction in progress			115,793			140			1,393
Other			1,446			969			17
Intangible assets			13,756			12,475			166
Software			9,545			6,967			115
Lease assets			3,342			2,550			40
Other			869			2,957			11
Customers’ liabilities for acceptances and guarantees			2,446,928			1,993,974			29,428
Allowance for loan losses			(501,025	)		(438,653	)		(6,026	)
Total assets		¥	36,789,867		¥	35,634,209		$	442,452

- 2 -

[Japan Finance Corporation]

		March 31, 2011			March 31, 2010			March 31, 2011
		In millions of yen			In millions of yen			In millions of U.S. dollars
Liabilities:
Borrowed money		¥	22,036,903		¥	21,220,659		$	265,026
Borrowings			22,036,903			21,220,659			265,026
Bonds payable	Note. 7		5,670,825			5,949,515			68,200
Entrusted funds			37,735			37,288			454
Reserve for insurance policy liabilities			1,810,579			1,439,474			21,775
Other liabilities			125,833			121,612			1,513
Accrued expenses			62,214			70,796			748
Unearned revenue			43,822			25,713			527
Derivatives other than for trading-liabilities			1,899			1,600			23
Lease obligations			7,479			6,824			90
Other			10,417			16,677			125
Provision for bonuses			5,167			5,332			62
Provision for directors’ bonuses			25			26			0
Provision for retirement benefits			206,434			204,332			2,483
Provision for directors’ retirement benefits			116			72			1
Reserve for compensation losses	Note. 9		59,757			87,310			719
Acceptances and guarantees			2,446,928			1,993,974			29,428
Total liabilities		¥	32,400,307		¥	31,059,599		$	389,661
Net assets:
Capital stock			3,352,547		¥	3,251,797		$	40,319
Capital surplus			2,007,351			2,405,103			24,141
Special reserve for administrative improvement funds			181,500			181,500			2,182
Legal capital surplus			1,825,851			2,223,603			21,959
Retained earnings			(1,126,453	)		(1,222,398	)		(13,547	)
Legal retained earnings			745,412			728,808			8,965
Other retained earnings			(1,871,865	)		(1,951,207	)		(22,512	)
Retained earnings brought forward			(1,871,865	)		(1,951,207	)		(22,512	)
Total shareholders’ equity			4,233,444			4,434,501			50,913
Valuation difference on available for sale securities			(1,665	)		(687	)		(20	)
Deferred gains or losses on hedges			157,781			140,795			1,898
Valuation and translation adjustments			156,115			140,107			1,878
Total net assets		¥	4,389,560		¥	4,574,609		$	52,791
Total liabilities and net assets		¥	36,789,867		¥	35,634,209		$	442,452

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[Japan Finance Corporation]

STATEMENTS OF OPERATIONS

	March 31, 2011			March 31, 2010			March 31, 2011
	In millions of yen			In millions of yen			In millions of U.S. dollars
Ordinary income:	¥	768,105		¥	751,079		$	9,238
Interest income		554,071			543,723			6,664
Interest on loans and discounts		484,591			503,189			5,828
Interest and dividends on securities		970			765			12
Interest on receivables under resale agreements		123			40			1
Interest on deposits with banks		4,419			4,090			53
Interest on interest swaps		55,061			35,617			662
Other interest income		8,904			19			108
Fees and Commissions		16,086			13,022			193
Fees and commissions on compensation security contract		2,679			1,577			32
Other fees and commissions		13,407			11,444			161
Insurance premiums and other		147,864			156,576			1,778
Insurance premiums		147,864			156,576			1,778
Other ordinary income		74			34			1
Income from derivatives other than for trading or hedging		—			1			—
Other		74			33			1
Receipts from the national budget		43,142			36,057			519
Receipts from general account of the national budget		43,131			36,044			519
Receipts from special account of the national budget		11			13			0
Other income		6,865			1,665			83
Gain on sales of stocks and other securities		0			—			0
Other		6,865			1,665			83
Ordinary expenses:		1,643,704			1,869,833			19,768
Interest expenses		322,782			321,571			3,882
Interest on call money		169			53			2
Interest on borrowings and rediscounts		211,024			211,972			2,538
Interest on short-term bonds		—			226			—
Interest on bonds		100,094			107,809			1,204
Other interest expenses		11,493			1,509			138
Fees and commissions payments		12,790			10,983			154
Expenses on compensation security contract		4,589			2,141			55
Other fees and commissions		8,200			8,841			99
Expenses on insurance claims and other		954,365			1,148,334			11,478
Expenses on insurance claims		723,170			869,591			8,697
Recoveries of insurance claims		(139,910	)		(142,918	)		(1,682	)
Provision of reserve for insurance policy liabilities		371,104			421,661			4,463
Other ordinary expenses		4,997			7,043			60
Loss on foreign exchange transactions		2,501			3,416			30
Loss on devaluation of bonds		189			1,051			2
Amortization of bond issuance cost		1,695			2,150			20
Expenses on derivatives other than for trading or hedging		7			68			0
Interest subsidies		379			—			5
Other		224			356			3
General and administrative expenses		132,987			133,010			1,599
Other expenses		215,781			248,890			2,595
Provision of allowance for loan losses		162,468			149,139			1,954
Provision of reserve for compensation losses		27,966			84,309			336
Written-off of loans		19,937			9,283			240
Losses on devaluation of stocks and other securities		442			639			5
Other		4,966			5,518			60
Ordinary loss		875,599			1,118,754			10,530
Extraordinary income		2,683			7,660			32
Gain on disposal of noncurrent assets		1			1			0
Recoveries of written-off claims		2,670			7,650			32
Other		11			9			0
Extraordinary losses		13,587			1,797			163
Loss on disposal of noncurrent assets		13,143			186			158
Impairment loss		441			1,607			5
Other		2			3			0
Net loss	¥	886,503		¥	1,112,890		$	10,661

- 4 -

[Japan Finance Corporation]

Statements of Changes in Net Assets

	March 31, 2011			March 31, 2010			March 31, 2011
	In millions of yen			In millions of yen			In millions of U.S. dollars
Shareholders’ equity
Capital stock
Balance at the beginning of current period	¥	3,251,797		¥	2,452,167		$	39,108
Changes of items during the period
Issuance of new shares		100,750			799,630			1,211
Total changes of items during the period		100,750			799,630			1,211
Balance at the end of current period		3,352,547			3,251,797			40,319
Capital surplus
Special reserve for administrative improvement funds
Balance at the beginning of current period		181,500			181,500			2,182
Changes of items during the period
Total changes of items during the period		—			—			—
Balance at the end of current period		181,500			181,500			2,182
Legal capital surplus
Balance at the beginning of current period		2,223,603			1,291,138			26,742
Changes of items during the period
Issuance of new shares		601,300			2,051,600			7,232
Reversal of legal capital surplus (Deficit disposition)		(999,052	)		(1,119,135	)		(12,015	)
Total changes of items during the period		(397,752	)		932,464			(4,783	)
Balance at the end of current period		1,825,851			2,223,603			21,959
Total capital surplus
Balance at the beginning of current period		2,405,103			1,472,638			28,924
Changes of items during the period
Issuance of new shares		601,300			2,051,600			7,232
Reversal of legal capital surplus (Deficit disposition)		(999,052	)		(1,119,135	)		(12,015	)
Total changes of items during the period		(397,752	)		932,464			(4,783	)
Balance at the end of current period		2,007,351			2,405,103			24,141

- 5 -

[Japan Finance Corporation]

	March 31, 2011			March 31, 2010			March 31, 2011
	In millions of yen			In millions of yen			In millions of U.S. dollars
Retained earnings
Legal retained earnings
Balance at the beginning of current period		728,808			715,389			8,765
Changes of items during the period
Provision of legal retained earnings		16,603			13,419			200
Total changes of items during the period		16,603			13,419			200
Balance at the end of current period		745,412			728,808			8,965
Other retained earnings
Retained earnings brought forward
Balance at the beginning of current period		(1,951,207	)		(1,930,613	)		(23,466	)
Changes of items during the period
Provision of legal retained earnings		(16,603	)		(13,419	)		(200	)
Payment to national treasury		(16,603	)		(13,419	)		(200	)
Reversal of legal capital surplus( Deficit disposition)		999,052			1,119,135			12,015
Net (loss)		(886,503	)		(1,112,890	)		(10,661	)
Total changes of items during the period		79,341			(20,593	)		954
Balance at the end of current period		(1,871,865	)		(1,951,207	)		(22,512	)
Total retained earnings
Balance at the beginning of current period		(1,222,398	)		(1,215,224	)		(14,701	)
Changes of items during the period
Payment to national treasury		(16,603	)		(13,419	)		(200	)
Reversal of legal capital surplus(Deficit disposition)		999,052			1,119,135			12,015
Net (loss)		(886,503	)		(1,112,890	)		(10,661	)
Total changes of items during the period		95,945			(7,174	)		1,154
Balance at the end of current period		(1,126,453	)		(1,222,398	)		(13,547	)
Total shareholders’ equity
Balance at the beginning of current period		4,434,501			2,709,581			53,331
Changes of items during the period
Issuance of new shares		702,050			2,851,230			8,443
Payment to national treasury		(16,603	)		(13,419)			(200	)
Net (loss)		(886,503	)		(1,112,890	)		(10,661	)
Total changes of items during the period		(201,056	)		1,724,920			(2,418	)
Balance at the end of current period		4,233,444			4,434,501			50,913

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[Japan Finance Corporation]

	March 31, 2011			March 31, 2010			March 31, 2011
	In millions of yen			In millions of yen			In millions of U.S. dollars
Valuation and translation adjustments
Valuation difference on available-for-sale securities
Balance at the beginning of current period		(687	)		(1,064	)		(8	)
Changes of items during the period
Net changes of items other than shareholders’ equity		(977	)		377			(12	)
Total changes of items during the period		(977	)		377			(12	)
Balance at the end of current period		(1,665	)		(687	)		(20	)
Deferred gains or losses on hedges
Balance at the beginning of current period		140,795			172,049			1,693
Changes of items during the period
Net changes of items other than shareholders’ equity		16,985			(31,253	)		205
Total changes of items during the period		16,985			(31,253	)		205
Balance at the end of current period		157,781			140,795			1,898
Total valuation and translation adjustments
Balance at the beginning of current period		140,107			170,984			1,685
Changes of items during the period
Net changes of items other than shareholders’ equity		16,007			(30,876	)		193
Total changes of items during the period		16,007			(30,876	)		193
Balance at the end of current period		156,115			140,107			1,878
Total net assets
Balance at the beginning of current period		4,574,609			2,880,565			55,016
Changes of items during the period
Issuance of new shares		702,050			2,851,230			8,443
Payment to national treasury		(16,603	)		(13,419	)		(200	)
Net (loss)		(886,503	)		(1,112,890	)		(10,661	)
Net changes of items other than shareholders’ equity		16,007			(30,876	)		193
Total changes of items during the period		(185,048	)		1,694,043			(2,225	)
Balance at the end of current period	¥	4,389,560		¥	4,574,609		$	52,791

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[Japan Finance Corporation]

STATEMENT OF CASH FLOW

		March 31, 2011			March 31, 2010			March 31, 2011
		In millions of yen			In millions of yen			In millions of U.S. dollars
Cash flow from operating activities
Net loss		¥	(886,503	)	¥	(1,112,890	)	$	(10,661	)
Depreciation and amortization			8,496			8,360			102
Impairment loss			441			1,607			5
Increase in allowance for loan losses			62,372			20,744			750
Increase in reserve for insurance policy liabilities			371,104			421,661			4,463
Decrease in provision for bonuses			(164	)		(476	)		(2	)
Decrease in provision for directors’ bonuses			(0	)		(3	)		(0	)
Increase in provision for retirement benefits			2,072			4,048			25
Increase in provision for directors’ retirement benefits			44			46			1
Increase (decrease) in reserve for compensation losses			(27,553	)		84,309			(331	)
Gain on fund management			(554,071	)		(543,723	)		(6,664	)
Financing expenses			322,782			321,571			3,882
Loss (gain) related to securities			(2,739	)		1,493			(33	)
Foreign exchange losses			9,744			5,650			117
Loss on disposal of noncurrent assets			13,142			184			158
Net decrease (increase) in loans and bills discounted			169,360			(5,173,595	)		2,037
Net increase in borrowed money			816,244			5,230,095			9,817
Net increase in entrusted funds			446			585			5
Net decrease (increase) in deposit			188,880			(1,309,970	)		2,272
Net decrease (increase) in receivables under resale agreements			22,983			(11,496	)		276
Net decrease in short-term corporate bonds			—			(300,111	)		—
Increase (decrease) in straight bonds-issuance and redemption			(279,909	)		175,582			(3,366	)
Proceeds from fund management			555,664			557,105			6,683
Payments for finance			(329,960	)		(314,003	)		(3,968	)
Other			(245,335	)		(73,752	)		(2,952	)
Subtotal			217,542			(2,006,944	)		2,616
Net cash provided by (used in) operating activities			217,542			(2,006,944	)		2,616
Cash flow from investing activities
Purchase of securities			(2,158,080	)		(673,412	)		(25,954	)
Proceeds from sales of securities			16,027			38			193
Proceeds from redemption of securities			1,067,715			664,259			12,841
Purchase of property, plant and equipment			(3,926	)		(2,714	)		(47	)
Proceeds from sales of property, plant and equipment			2			4			0
Purchase of intangible assets			(3,630	)		(3,609	)		(44	)
Proceeds from sales of intangible assets			—			5			—
Net cash used in investing activities			(1,081,892	)		(15,428	)		(13,011	)
Cash flow from financing activities
Proceeds from issuance of common stock			702,050			2,851,230			8,443
Repayments of lease obligations			(2,784	)		(2,271	)		(33	)
Payment to national treasury			(16,603	)		(13,419	)		(200	)
Net cash provided by financing activities			682,661			2,835,538			8,210
Effect of exchange rate change on cash and cash equivalents			(9,744	)		(5,650	)		(117	)
Net increase (decrease) in cash and cash equivalents			(191,432	)		807,515			(2,302	)
Cash and cash equivalents at beginning of period			1,194,787			387,271			14,369
Cash and cash equivalents at end of period	Note.14	¥	1,003,355		¥	1,194,787		$	12,067

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NOTES TO FINANCIAL STATEMENTS

JAPAN FINANCE CORPORATION

1. Basis of presentation

The accompanying financial statements have been prepared from the accounting records maintained by Japan Finance Corporation (“JFC”) in accordance with the accounting principles and practices generally accepted in Japan, which are different in certain aspects from the application and disclosure requirements of International Financial Reporting Standards.

Consolidated financial statements are not prepared since JFC has no subsidiaries.

The amounts indicated in millions of yen are rounded down by omitting figures less than one million. Totals may therefore not add up exactly because of this rounding.

Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥83.15=$1.00, the exchange rate as of March 31, 2011 has been used in translation. The presentation of such amounts is not intended to imply that Japanese yen have been or could be readily converted, realized or settled into U.S. dollars at that rate or any other rate.

According to the Article 41 of the JFC Act, JFC shall separate the accounting for each category of operations listed below.

(a) Operations described in the item of (1), Article 41 (hereinafter referred to as “Micro Business and Individual Operations”)

(b) Operations described in the item of (2), Article 41 (hereinafter referred to as “Agriculture, Forestry, Fisheries and Food Business Operations”)

(c) Operations described in the item of (3), Article 41(hereinafter referred to as “SME Loan Programs and Securitization Support Programs (Guarantee-type Operation)”)

(d) Operations described in the item of (4), Article 41(hereinafter referred to as “Securitization Support Programs (Purchase-type Operation)”)

(e) Operations described in the item of (5), Article 41 (hereinafter referred to as “Credit Insurance Programs”)

(f) Operations described in the item of (6), Article 41 (hereinafter referred to as “JBIC Operations”)

(g) Operations described in Article 16 of the Act on Special Measures Concerning Smooth Implementation of Realignment of United States Forces in Japan (hereinafter referred to as “Financial Operations for Facilitating Realignment of United States Forces in Japan”)

(h) Operations described in the item of (7), Article 41 (hereinafter referred to as “Operations to Facilitate Crisis Responses⁽*⁾”)

(i) Operations described in Article 6 of the Bill on the Promotion of Businesses to Develop and Manufacture Energy and Environmentally Friendly Products (hereinafter referred to as “Operations to Facilitate Specific Businesses Promotions”)

2. Significant accounting policies

(a) Securities

Held-to-maturity securities are carried at amortized cost based on the moving average method. Investments in affiliates are carried at cost based on the moving average method. Available-for-sale securities, which have a readily determinable fair value are stated at fair value with changes in net unrealized gains or losses included directly in Net assets. Available-for-sale securities whose fair value is extremely difficult to be determined are carried at cost based on the moving average method.

(b) Valuation method for derivative financial instruments

Derivative financial instruments are carried at fair value. However, certain credit default swap transactions, for which neither a quoted market price nor a reliably estimated value is available and the fair value is undeterminable, are accounted for as guarantee of obligation.

(c) Depreciation basis for fixed assets

(i) Property, plant and equipment (except for lease assets)

Tangible fixed assets are depreciated under the declining balance method over their useful economic lives except for buildings (excluding installed facilities) which are depreciated under the straight-line method.

Depreciation is based on the following range of estimated useful lives:

Buildings: 2 years to 50 years

Other: 2 years to 20 years

* Please note that “Operations to Facilitate Crisis Response” is previously described as “Crisis Response Operations”.

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(ii) Intangible assets (except for lease assets)

Depreciation of intangible fixed assets is computed by the straight-line method. Software used by JFC is depreciated over its useful life (5 years).

(iii) Lease Assets

Lease assets in “property, plant and equipment” or “intangible assets,” under finance leases that do not involve transfer of ownership to the lessee are depreciated under the straight-line method over the lease term. Depreciation for lease assets is calculated with zero residual value being assigned to the asset.

(d) Method of amortization for deferred charges

Bond issuance costs

Bond issuance costs are expensed as incurred.

(e) Foreign currency translation and revaluation method

JFC maintains its accounting records in Japanese yen. Assets and liabilities denominated in foreign currencies are mostly translated into Japanese yen at the market exchange rate prevailing at the fiscal year end.

(f) Allowance for Loan losses

The allowance for loan losses is maintained in accordance with internally established standards. The allowance for claims on debtors who are legally bankrupt (“Bankrupt borrowers”) or substantially bankrupt (“Substantially bankrupt borrowers”) is provided based on the outstanding balance after the write-offs described in Note 5(e) and the deductions of the amount expected to be collected through the disposal of collateral and execution of guarantees.

The allowance for claims on debtors who are not legally bankrupt but are likely to become bankrupt (“Potentially bankrupt borrowers”) is provided based on an assessment of the overall solvency of the debtors after deducting the amount expected to be collected through the disposal of collateral and the execution of guarantees.

The allowance for claims on debtors other than Bankrupt borrowers, Substantially bankrupt borrowers and Potentially bankrupt borrowers is provided primarily based on the default rate, which is calculated based on the actual defaults during a certain period in the past.

The allowance for possible losses on specific overseas loans is provided based on the expected loss amount taking into consideration the political and economic situations of these countries.

All claims are assessed initially by the operational departments and subsequently by risk evaluation departments based on internal rules for self-assessment of asset quality. The risk evaluation department, which is independent from the operational departments, reviews these self-assessments, and the allowance is provided based on the results of the assessments.

Write-offs of the Account for Micro Business and Individual Operations, the Account for Agriculture, Forestry, Fisheries and Food Business Operations, and the Account for SME Loan Programs and Securitization Support Programs (Guarantee-type Operation) are recognized by offsetting the current allowance for loan losses for the amount of the claim deemed uncollectable against the year end claim amount balance; the previous allowance for loan losses and claim balances are reversed at the start of the fiscal year, upon approval received from the competent minister based on Article 4 of the “Ministerial Ordinance Concerning Accounting for the Japan Finance Corporation”.

The Account for Micro Business and Individual Operations and the Account for SME Loan Programs and Securitization Programs (Guarantee-type Operation) have debtors whose condition could not be determined through the self-assessment as of the base date due to the temporary difficulties in the reassessment and physical inspection of guarantees and collateral as well as ascertaining the accurate status of debtors resulting from the impact of the Great East Japan Earthquake. In order to consider credit risk from the earthquake disaster, an allowance for loan losses is calculated by reasonably estimating future losses and making appropriate adjustments, such as to future outlooks, for the loan loss ratio of borrower classifications given as of the base date.

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(g) Reserve for compensation losses

The “reserve for compensation losses” provides for losses based on the estimated amounts of future losses attributed to compensation security contracts.

(h) Provision for bonuses

The “provision for bonuses” is calculated and provided for based on the estimated amounts of future payments attributable to the services that have been rendered by employees to the date of the balance sheet.

(i) Provision for directors’ bonuses

The “provision for directors’ bonuses” is calculated and provided for based on the estimated amounts of future payments attributable to the services that have been rendered by directors to the date of the balance sheet.

(j) Provision for retirement benefits

The “provision for retirement benefits” represents the future payment for pension and retirement benefits to employees, and is accrued based on the projected benefit obligations and the estimated pension plan assets at the fiscal period end.

Unrecognized prior service costs are recognized as income or expense by the straight-line method over a certain number of years; 10 years within the average remaining work period of employees at the year of occurrence.

Unrecognized actuarial differences are recognized as income or expense from the following fiscal year by the straight-line method over a period up to a maximum of 10 years within the average remaining service period of employees of the respective fiscal year.

(k) Provision for directors’ retirement benefits

The “provision for directors’ retirement benefits”, which provides for future retirement pension payment to directors, corporate auditors and executive officers, is recognized at the amount accrued at the end of the respective fiscal year.

(l) Accounting for hedges of interest rate risk

(i) Hedge accounting

JFC uses derivatives for interest rate risk hedging purposes under the deferral method.

(ii) Hedging instruments and hedged items

Hedging instruments: interest rate swaps

Hedged items: loans, borrowings, bonds and notes

(iii) Hedging policy

JFC enters into hedging transactions up to the amount of the underlying hedged assets and liabilities.

(iv) Assessment of hedge effectiveness

JFC assesses the effectiveness of designated hedges by measuring and comparing the change of fair value or cumulative change of cash flows of both hedging instruments and corresponding hedged items from the date of inception of the hedges to the assessment date.

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(m) Accounting for hedges of foreign exchange risks

Hedge instruments used to hedge foreign exchange risks associated with various foreign currency denominated monetary assets and liabilities are accounted for using the deferral method, in accordance with the standard treatment of The Japanese Institute of Certified Public Accountants (JICPA) Industry Audit Committee Report No. 25.

The effectiveness of the hedging instruments described above, such as currency swaps, foreign exchange forward contracts and similar transactions, used for hedging the foreign exchange risks of loans and bills discounted, borrowings, and bonds payable denominated in foreign currencies, is assessed by comparing the foreign currency position of the hedged loans and bills discounted, borrowings, and bonds payable with that of the hedging instruments. Some assets and liabilities denominated in foreign currency for which currency swaps are used to hedge the foreign currency fluctuations are translated at the contracted rate if the currency swaps qualify for hedge accounting. However, assessment of effectiveness is omitted for those currency swaps.

(n) Accounting Policies for Reserve for Insurance Policy liabilities

The “reserve for insurance policy liabilities” consists of the following two items, pursuant to Article 9, Paragraph 1 of the Ministerial Ordinance Concerning Accounting for JFC. Furthermore, in accordance with Article 9, Paragraph 2 of the Ministerial Ordinance Concerning Accounting for JFC, an additional amount shall be provided for insurance policy liabilities in the event that an impediment to the fulfillment of future obligations has been confirmed.

(i) Policy reserve

The policy reserve which provides for future obligations under insurance policies has been calculated based on actuarial and statistical method.

(ii) Outstanding Claims reserve

The outstanding claims reserve represents the accumulation of the estimates for reported losses and includes provision for losses incurred but not reported, after the deduction of collectable amounts based on insurance policies.

(o) Consumption and Other Taxes

Consumption taxes and local consumption taxes (“consumption taxes”) are excluded from transaction amounts. Amounts of non-deductible consumption taxes related to property, plant and equipment are expensed as incurred.

(p) Scope of cash and cash equivalents in the statements of cash flow

Cash and cash equivalents as stated in the Statements of Cash Flow consists of cash on hand and Current deposit in “Cash and due from banks” in the Balance Sheets.

3. Change in accounting policy

(Accounting standard for equity method of accounting for investments)

ASBJ Statement No. 16, Accounting Standard for Equity Method of Accounting for Investments, issued on March 10, 2008, and ASBJ Practical Issue Task Force (PITF) No. 24, Practical Solution on Unification of Accounting Policies Applied to Associates Accounted for Using the Equity Method, issued on March 10, 2008, have been adopted commencing with this fiscal year end.

(Accounting standard for asset retirement obligations)

ASBJ Statement No. 18, Accounting Standard for Asset Retirement Obligations, issued on March 31, 2008, and ASBJ Guidance No. 21, Guidance on Accounting Standard for Asset Retirement Obligations, issued on March 31, 2008, have been adopted commencing with this fiscal year end.

Note that this adoption does not have any impact on income or expense.

4. Equity securities of or investment in subsidiaries and affiliates

Equity securities of or investment in subsidiaries and affiliates is ¥54,223 million ($652 million) and ¥26,887 million as of March 31, 2011 and 2010, respectively.

5. Receivables under resale agreements

Among the securities acquired under resale agreements, these securities which can be sold or pledged without restrictions amounts to ¥22,983 million as of March 31, 2010.

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6. Loans

All loans entered into are loans on deeds. The amounts reported in the balance sheets as of March 31, 2010 and 2011 include the following:

	(In millions of yen)
	As of March 31, 2010
	Account for Micro  Business and Individual Operations		Account  for Agriculture, Forestry, Fisheries  and Food Business Operations		Account for SME  Loan Programs and Securitization Support Programs (Guarantee-type Operation)		Account  for JBIC Operations
Bankrupt loans	¥	40,632	¥	1,931	¥	31,758	¥	17,938
Non-accrual loans		146,639		72,648		372,665		257,260
Loans with interest or principal repayments more than three months in arrears		124		2,406		19		59
Restructured loans		465,414		18,824		57,654		91,578
Total	¥	652,810	¥	95,811	¥	462,097	¥	366,837

(Note)     The description of the following three accounts, Securitization Support Programs (Purchase-type operation), Credit Insurance Programs, and Operations to Facilitate Crisis Responses is omitted since there is no balance in these accounts.

	(In millions of yen)
	As of March 31, 2011
	Account for Micro  Business and Individual Operations		Account  for Agriculture, Forestry, Fisheries  and Food Business Operations		Account for SME  Loan Programs and Securitization Support Programs (Guarantee-type Operation)		Account for JBIC Operations
Bankrupt loans	¥	35,305	¥	1,568	¥	22,488	¥	8,969
Non-accrual loans		136,178		82,436		358,787		97,717
Loans with interest or principal repayments more than three months in arrears		85		2,930		—		—
Restructured loans		570,268		13,553		47,450		187,046
Total	¥	741,837	¥	100,488	¥	428,727	¥	293,733
	(In millions of U.S. dollars)
	As of March 31, 2011
	Account for Micro  Business and Individual Operations		Account  for Agriculture, Forestry, Fisheries  and Food Business Operations		Account for SME  Loan Programs and Securitization Support Programs (Guarantee-type Operation)		Account for JBIC  Operations
Bankrupt loans	$	425	$	20	$	270	$	108
Non-accrual loans		1,638		991		4,315		1,175
Loans with interest or principal repayments more than three months in arrears		1		35		—		—
Restructured loans		6,858		163		571		2,250
Total	$	8,922	$	1,209	$	5,156	$	3,533

(Note) The description of the following five accounts, Securitization Support Programs (Purchase-type operation), Credit Insurance Programs, Financial Operations for Facilitating Realignment of United States Forces in Japan, Operations to Facilitate Crisis Responses and Operations to Facilitate Specific Businesses Promotion is omitted since there is no balance in these accounts.

(a) “Bankrupt loans” are loans, defined in Article 96, Paragraph 1, Item 3 and 4 of the corporate Tax Law Enforcement Ordinance (Government Ordinance No. 97), on which accrued interest income is not recognized as there is substantial uncertainty over the ultimate collectability of either principal or interest because they have been in arrears for a considerable period of time or for other reasons.

(b) “Non-accrual loans” are loans on which accrued interest income is not recognized, although this excludes Bankrupt loans and the loans on which interest payments are deferred in order to support the borrowers’ recovery from financial difficulties.

(c) “Loans with interest or principal repayments more than three months in arrears” are loans whose principal or interest payment is more than three months in arrears, and which do not fall under the category of “Bankrupt loans” and “Non-accrual loans”

(d) “Restructured loans” are loans whose repayment terms and conditions have been amended in favor of the borrowers (e.g. reduction of or exemption from the stated interest rate, the deferral of interest payments, the extension of principal repayments or renunciation of claims) in order to support the borrowers’ recovery from financial difficulties, and which do not fall under the category of “Bankrupt loans”, “Non-accrual loans”, or “Loans with interest or principal repayments more than three months in arrears”.

(e) The amounts of loans indicated in the table above are the gross amounts prior to the deduction of allowance for possible loan losses.

JFC, as a policy, does not pay down loans in part or in full immediately after the execution of the loan agreements, but instead makes disbursement, in accordance with the progress of the underlying projects. These undisbursed amounts are not included in the loans on deed in the Balance Sheets. The balance of unpaid amounts as of March 31, 2011 and 2010 are ¥1,085,787 million ($13,058 million) and ¥1,415,923 million, respectively.

With respect to claims with collateral or guarantees on debtors who are legally or substantially bankrupt (“Bankrupt borrowers and substantially bankrupt borrowers”), the residual booked amount of the claims after deduction of the amount which is deemed collectable through the disposal of collateral or the execution of guarantees is written off as of March 31, 2011 and 2010, respectively. The amount of accumulated write-offs as of March 31, 2011 and 2010 are ¥463,919 million ($5,579 million) and ¥527,879 million, respectively.

7. Assets pledged as collateral

Pursuant to Article 52 of the JFC Act, assets of JFC are pledged as general collateral for bonds totaling ¥5,670,825 million ($68,200 million) and ¥5,949,515 million as of March 31, 2011 and 2010, respectively.

8. Accumulated depreciation of fixed assets

Accumulated depreciation of fixed assets as of March 31, 2011 and 2010 amounted to ¥10,324 million ($124 million) and ¥6,851 million, respectively.

9. Amount of compensation security contract

	March 31, 2011		March 31, 2010		March 31, 2011
	(In millions of yen)		(In millions of yen)		(In millions of U.S. dollars)
The total amount of compensation outstanding (46,703 contracts and 28,243 contracts as of March 31, 2011 and 2010, respectively)	¥	1,869,023	¥	1,242,750		$22,478
Reserve for compensation	¥	59,757	¥	87,310		$719
Net amount	¥	1,809,266	¥	1,155,440		$21,759

10. Restriction in dividend distribution

JFC is restricted in its dividend distribution pursuant to Article 47 of the JFC Act^(*1). In the event that the amount of the retained earnings brought forward in the balance sheet exceeds zero in each account related to the operations listed in each Item of Article 41^(*2) hereof, JFC shall accumulate, as a reserve, the amount calculated in accordance with the standards prescribed by a Cabinet Order to the extent that it reaches the certain amount, and if there is still a surplus, JFC shall pay such surplus into the national treasury within 3 months after closing date.

In the event that the amount of the retained earnings brought forward falls below zero in each account set forth in the preceding paragraph, legal capital surplus and legal retained earnings shall be transferred to retained earnings brought forward to the extent that the amount of retained earnings brought forward becomes zero.

*1 Including instances deemed applicable by the replacement of terms pursuant to the provisions of Article 22, Paragraph 1 of the Act on Special Measures concerning Smooth Implementation of Realignment of United States Forces in Japan (Act No. 67; 2007) and instances deemed applicable by the replacement of terms pursuant to the provisions of Article 17 of the Act on the Promotion of Businesses to Develop and Manufacture Energy and Environmentally Friendly Products (Low Carbon Investment Promotion Law) (Act No. 38; 2010).

*2 Including instances deemed applicable by the replacement of terms pursuant to the provisions of Article 17 of the Act on the Promotion of Businesses to Develop and Manufacture Energy and Environmentally Friendly Products (Low Carbon Investment Promotion Law) (Act No. 38; 2010) and operations listed in Article 16 of the Act on Special Measures concerning Smooth Implementation of Realignment of United States Forces in Japan hereafter referred to as “operations listed under each section of Article 41 of the same law.”

- 13 -

11. Impairment losses

JFC does not have any operating assets that are subject to impairment. For idle assets, an impairment loss is recognized as the difference between the recoverable amount and the carrying value at the end of the fiscal year.

Each asset in the grouping of Idle assets that have suffered impairment is treated as an individual unit.

The recoverable value in principle is calculated using net realizable value. The net realizable value is determined by the appraisal value based on the Real Estate Appraisal Standard. For certain immaterial real estate, the net realizable value is calculated based on the index that incorporates market value.

Impairment loss is recognized for the following assets:

For the fiscal year ended March 31, 2010

Region	Purpose of use	Type	Impairment loss (In millions of yen)
Tokyo metropolitan	Idle assets: 4 items	Land, buildings		1,514
Other	Idle assets: 22 items	Land, buildings		93

For the fiscal year ended March 31, 2011

Region	Purpose of use	Type	Impairment loss (In millions of yen)		Impairment loss (In millions of U.S. dollars)
Tokyo metropolitan	Idle assets: 5 items	Land, buildings		176		2
Other	Idle assets: 21 items	Land, buildings		265		3

From this fiscal year, the recoverable value has been set at ¥0 ($0) for assets that are not expected to be used in the future.

12. Account name and the amount related to transactions with subsidiaries and affiliates

For the fiscal year ended March 31, 2010

Other – Other income: ¥100 million

For the fiscal year ended March 31, 2011

Other – Other income: ¥2,210 million ($27 million)

13. Issued shares and treasury stocks

For the fiscal year ended March 31, 2010, the type and number of issued shares and treasury stocks are as follows:

	(unit: thousands of shares)
Types	The number of stocks at beginning of the fiscal  year		Increase during the  fiscal year		Decrease during the fiscal year		The number of stocks at end of the fiscal  year		Remarks
Issued shares
Common Stocks		4,143,144,407		2,851,230,000		—		6,994,374,407
Classified Stock		—		—		—		—
Total		4,143,144,407		2,851,230,000		—		6,994,374,407
Treasury stock
Common Stock		—		—		—		—
Classified Stock		—		—		—		—
Total		—		—		—		—

(Note) The increase is due to the issuance of 2,851,230,000 thousand shares.

For the fiscal year ended March 31, 2011, the type and number of issued shares and treasury stocks are as follows:

	(unit: thousands of shares)
Types	The number of stocks at beginning of the fiscal  year		Increase during the  fiscal year		Decrease during the fiscal year		The number of stocks at end of the fiscal  year		Remarks
Issued shares
Common Stocks		6,994,374,407		702,050,000		—		7,696,424,407
Classified Stock		—		—		—		—
Total		6,994,374,407		702,050,000		—		7,696,424,407
Treasury stock
Common Stock		—		—		—		—
Classified Stock		—		—		—		—
Total		—		—		—		—

(Note)     The increase is due to the issuance of 702,050,000 thousand shares.

14. Cash Flow

(a) “Cash and cash equivalents” in the statement of cash flows as of March 31, 2011 and 2010 reconciles to cash and due from banks in the balance sheets as follows:

	March 31, 2011			March 31, 2010			March 31, 2011
	(In millions of yen)			(In millions of yen)			(In millions of U.S. dollars)
Cash and due from banks	¥	3,354,455		¥	3,734,767		$	40,342
Time deposit and others		(2,351,100	)		(2,539,980	)		(28,275	)
Cash and cash equivalents	¥	1,003,355		¥	1,194,787		$	12,067
(b) Significant non-cash transaction The increase in finance lease transactions in the fiscal year ended March 31, 2011 and 2010 are ¥3,250 million ($39 million) and ¥3,160 million, respectively.

15. Lease Transactions

(a) Finance Lease Transactions in the fiscal year ended March 31, 2011 and 2010

Finance lease transactions, that do not involve the transfer of ownership to the lessee.

(i) Description of Lease assets

 Property, plant and equipment: Equipment and Property

‚ Intangible assets: Software

(ii) Depreciation of lease assets is calculated under the method as set forth in Note 2 (c).

(b) Operating Lease Transactions

Future minimum lease payments subsequent to March 31, 2011 and 2010 for noncancelable operating lease transactions are as follows:

	March 31, 2011		March 31, 2010		March 31, 2011
	(In millions of yen)		(In millions of yen)		(In millions of U.S. dollars)
Due within one year	¥	0	¥	0	$	0
Due after one year		1		2		0
Total	¥	2	¥	3	$	0

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16. Financial instruments and related disclosure

Previous Fiscal Year (April 1, 2009 to March 31, 2010)

1. Status of financial instruments

(1) Initiatives for financial instruments

Based on the JFC Act, we are a governmental financial institution founded for the purpose of supplementing the financing conducted by general financial institutions and contributing to the development of the Japanese and global economic society and the improvement of the lifestyle of citizens.

The budget required for governmental financial operations is decided on by the Diet of Japan, and business plans and financial plans (funds for fiscal investment and loans, bonds, general accounting investment, equity participation, etc.) are appended to the budget and submitted to the Diet of Japan.

These operations are classified into Micro Business and Individual Operations; Agriculture, Forestry, Fisheries and Food Business Operations; SME Loan Programs and Securitization Support Programs (Guarantee-type Operation); Securitization Support Programs (Purchase-type Operation); Credit Insurance Programs; JBIC Operations and Operations to Facilitate Crisis Responses. Accounts are made for each classification (“operation account”) for accounting treatment.

The funds procured by JFC for fiscal investment and loans, bonds, general accounting investment are managed separately by each operation account. In principle, it is assumed that funds intended for one operation account will not be used for another operation account. Accordingly, asset and liability management is conducted for the risks associated with financial assets and liabilities for each operation account. Note that financial instruments that can be used for the management of surplus funds are limited to extremely safe instruments such as Japanese government bonds, etc., as stipulated by The JFC Act.

The Account for Micro Business and Individual Operations is for operations, such as business fund financing and educational loans, etc., aimed at micro businesses and individuals. To conduct these operations funds are raised through the borrowing of fiscal investment funds and loans and the issuing of bonds. ALM (asset and liability management) is conducted for financial assets and liabilities in this account to ensure that interest rate fluctuations do not have an adverse effect on these operations.

In the Account for Agriculture, Forestry, Fisheries and Food Business Operations, the main operations consist of supplementing the financing provided by general financial institutions and supplying long-term funds at a low interest rate aimed at businesses engaged in agriculture, forestry, fisheries and food manufacturing, etc., in order to contribute to the sustainable and robust development of the agriculture, forestry, fisheries business and ensure the stable supply of food. To conduct these operations funds are raised through borrowing from fiscal investment funds and loans and the issuing of bonds. Asset and liability management is conducted for the risks inherent in the financial assets and liabilities in this account.

In the Account for SME Loan Programs and Securitization Support Programs (Guarantee-type Operation), a stable supply of long-term funds is provided to supplement private sector financial institutions in order to support the growth and development of SMEs. To conduct these operations, funds are raised primarily through indirect financing by borrowing from the government and direct financing through the issuing of bonds. Also, derivative transactions are conducted for the purpose of mitigating risk inherent in foreign currency denominated transactions.

Operations in the Account for Securitization Support Programs (Purchase-type Operation) are conducted for the purpose of promoting the supply of unsecured funds to SMEs from private sector financial institutions, etc., utilizing securitization and fostering the securitization market for SME loan claims. To conduct these operations funds are raised through direct financing through the issuing of bonds.

In the Account for Credit Insurance Programs, insurance is provided for the guarantees related to the liabilities on SME loans. To conduct these operations funds are raised through capital investment from the government.

The purpose of the Account for JBIC Operations is to conduct the financing required for “Promoting overseas development and acquisition of strategically important natural resources to Japan”, “Maintaining and improving the international competitiveness of Japanese industries”, “Promoting overseas projects for conserving global environment, such as mitigating global warming”, and “Taking appropriate measures with respect to disruptions to international financial order”. Principal operations consist of export loans, import loans, investment financing, financing for business development and capital investment (including guarantees except for “capital investment”). To conduct these operations funds are raised through borrowing from fiscal investment funds and loans and the issuing of bonds. ALM (asset and liability management) is conducted for financial assets and liabilities in this account that are subject to interest-rate and currency fluctuations to ensure that interest-rate and currency fluctuations do not have an adverse effect on these operations. Also, derivative transactions are conducted for the purpose of mitigating risk inherent in foreign currency denominated transactions.

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In the Account for Operations to Facilitate Crisis Responses, financing operations including 1) loans, 2) credit insurance underwriting (a certain portion of compensation paid by JFC to cover losses incurred by specified financial institutions on loans, including equity participation), and 3) interest subsidies (interest subsidies provided by JFC to a specified financial institutions for loans, etc., conducted by specified financial institutions that received a credit facility from JFC ) are conducted for financial institutions specified by the competent minister for domestic and global financial disturbance recognized by the competent minister when a crisis such as a large-scale disaster occurs. To conduct these operations, the financing required for 1) loans is procured through the borrowing from Fiscal Investment and Loan Program (“FILP”), and the issuing of government guaranteed bonds. The loan period and borrowing period are equal, and the financing cost is covered by the interest on the loans. The financing required for 2) credit insurance underwriting, and 3) interest subsidies is procured through equity participation and grants from the government.

(2) Types of financial instruments and risks

The financial assets and liabilities owned by JFC are managed in separate operation accounts, and the risks associated with the financial assets and liabilities contained within each account are described below.

a. Account for Micro Business and Individual Operations

The financial assets in this account mainly include loans to micro business and individuals in Japan, and the financial liabilities mainly include borrowings and bonds. The associated risks are described below.

(a) Credit risk

The associated credit risk consists of risk of losses arising from uncollectable claims on business and educational loans from deterioration in creditworthiness or fluctuation in the value of the real estate-collateral of the entity to which credit is granted.

For this operation account, JFC strives to make a proper financing decision in the financial screening process, conducts detailed claims management based on the condition of the borrower after financing is provided, uses statistical management methods, and increases the sophistication of management methods employed. In addition, risks are distributed as the credit portfolio is comprised of small business and educational loans that do not concentrate credit on a specified region or industry. However, based on future economic trends and changes in the business climate of borrowers, the number of borrowers with deteriorated creditworthiness could increase, bringing about requests for financial support including loan restructuring, causing an increase in uncollectable claims and credits costs for this account.

(b) Market risk

The main type of market risk associated with this account is interest rate risk.

It is JFC policy to minimize interest rate risk by matching the cash flows between assets and liabilities. However, not all cash flows can be matched, so some gaps arise between assets and liabilities. This account could incur losses from the interest rate risk caused by this gap.

(c) Liquidity risk

Long-term and stable funds such as fiscal loan funds, government-backed bonds, and the FILP agency bonds are secured to finance this account and deposits are not accepted. To maintain daily cash flows, proper measures including establishing overdraft facility accounts with several private sector financial institutions have been taken, and JFC considers liquidity risk to be limited. However, financing costs could increase due to unexpected events.

b. Account for Agriculture, Forestry, Fisheries and Food Business Operations

The financial assets in this account mainly include loans to agriculture, forestry, fisheries and food businesses, and financial liabilities mainly include borrowings, bonds, and entrusted funds. The associated risks are described below.

(a) Credit risk

The associated credit risk consists of risk of losses arising from uncollectable claims on credit to agriculture, forestry, fisheries and food businesses from deterioration in creditworthiness or fluctuation in the value of the real estate-collateral of the entity to which credit is granted. For this reason, efforts are made to maintain and improve the soundness of assets through proper financial screening and account management throughout the year.

However, among the majority of borrowers that make up this account, there are many small businesses in the agriculture, forestry, fisheries sector. These businesses are especially susceptible to natural conditions such as weather, etc., so depending on future conditions, uncollectable claims and credits costs for this account could increase.

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(b) Market risk

The main type of market risk associated with this account is interest rate risk.

It is JFC policy to minimize interest rate risk by matching the duration of assets and liabilities. However, due to characteristics such as long redemption periods and fixed interest rates that are required by agriculture, forestry, and fisheries policy, duration gaps do arise. This account could incur losses from the interest rate risk caused by this gap.

(c) Liquidity risk

Long-term and stable funds such as fiscal loan funds, government-backed bonds, and the FILP agency bonds are secured to finance this account and deposits are not accepted. Cash flows are assessed and proper measures are taken, including establishing overdraft facility accounts with multiple private sector financial institutions, to maintain daily cash flows, and JFC considers liquidity risk to be limited. However, financing costs could increase due to unexpected events.

c. Account for SME Loan Programs and Securitization Support Programs (Guarantee-type Operation)

The financial assets in this account mainly include loans and securities for SMEs, and financial liabilities mainly include borrowings and bonds. The associated risks are described below.

(a) Credit risk

The following operations are conducted in this account: (1) Loans to SMEs, (2) Acquisition of bonds issued by SMEs, (3) Securitization of loan claims and bonds of SMEs, (4) Partial guarantee of loan claims for private sector financial institutions and partial guarantee of securitized financial products. Because credit is provided to SMEs, this account could incur uncollectable claims and losses caused by deterioration in creditworthiness or fluctuation in the value of the real estate-collateral of the SMEs to which credit is granted.

(b) Market risk

The main types of market risk associated with this account are interest rate risk and exchange rate risk.

It is JFC policy to minimize interest rate risk by matching the cash flows between assets and liabilities. However, not all cash flows can be matched, so some gaps arise between assets and liabilities. This account could suffer losses from the interest rate risk caused by this gap.

The exchange rate risk associated with the issue of foreign currency-denominated bonds also applies to this account. However this risk is fully hedged through currency swaps.

(c) Liquidity risk

Long-term and stable funds such as fiscal loan funds, government-backed bonds, and FILP agency bonds are secured to finance this account and deposits are not accepted. Cash flows are assessed and proper measures including establishing overdraft facility accounts with multiple private sector financial institutions are taken to maintain daily cash flows, and JFC considers liquidity risk to be limited. However, financing costs could increase due to unexpected events.

d. Account for Securitization Support Programs (Purchase-type Operation)

The financial assets in this account mainly include securities for SMEs, and financial liabilities mainly include bonds. The associated risks are described below.

(a) Credit risk

The following operations are conducted in this account: (1) Receipt and securitization of loan claims for private sector financial institutions (2) Partial purchase of securitized instruments. Since credit is provided to SMEs in this account, the account risks losses arising from uncollectable claims caused by deterioration in creditworthiness of the SMEs to which credit is granted and the resulting drop in value of securitized instruments owned.

(b) Market risk

The main type of market risk associated with this account is interest rate risk.

It is JFC policy to minimize interest rate risk by matching the cash flows between assets and liabilities.

(c) Liquidity risk

Long-term and stable funds such as FILP agency bonds are secured to finance this account and deposits are not accepted. Proper measures, including establishing overdraft facility accounts with multiple private sector financial institutions, are taken to maintain daily cash flows, and JFC considers liquidity risk to be limited. However, financing costs could increase due to unexpected events.

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e. Account for Credit Insurance Programs

The financial assets in this account mainly include Due from bank. Long-term and stable funds such as investments from the Japanese government are secured to finance this account and deposits are not accepted.

f. Account for JBIC Operations

The assets in this account mainly include loans to borrowers in Japan and overseas, and securities, and liabilities mainly include borrowings and bonds. The associated risks are described below.

(a) Credit risk

Credit risk is the risk that the account will suffer losses if the financial condition of the borrower deteriorates and the value of assets (including off-balance sheet assets) decrease or disappear.

The credit risks associated with this account include sovereign risk, country risk, and corporate risk. Characteristic of support for overseas economic transactions conducted in this account, much financing is conducted for overseas governments, governmental institutions, and overseas corporations. Much of the credit risk associated with the credit provided typically consists of sovereign or country risk.

As a result, if the financial condition of the individual borrower significantly deteriorates due to political and economic trends in the borrower’s country or region, the performance and financial condition of these operations can be adversely affected.

(Note) Sovereign risk refers to risk associated with credit supplied to foreign governments, country risk refers to risk associated with the country in which the corporation is located, and corporate risk refers to the risk associated with credit supplied to corporations.

(b) Market risk

Market risk is the risk that the value of assets and liabilities (including off-balance sheet assets) will fluctuate and losses will be incurred, or profits derived from assets and liabilities (including off-balance sheet assets) will fluctuate and losses will be incurred due to the fluctuation of various market risk factors such as interest rates, exchange rates, etc.

The market risk associated with this account mainly consists of exchange rate risk and interest rate risk, and losses could be suffered from these risks from market fluctuations. However, in principle, these risks are mitigated through interest rate swaps, currency swaps, and forward exchange transactions.

In this account hedge accounting is used for interest rate hedges, where the hedging instrument is interest rate swaps to hedge the market fluctuation risk associated with loans, borrowed money and bonds. The effectiveness of the hedges is assessed by measuring and comparing the change in fair value or cumulative change in cash flows of both hedging instruments and corresponding hedged items from the date of inception of the hedges to the assessment date.

In this account hedge accounting is used for foreign exchange hedges, where currency swaps and foreign exchange forward contracts are used to hedge items such as loans, borrowings, and bonds for exchange rate fluctuation risk. The effectiveness of the hedging currency-swaps and forward contracts, hedging the foreign exchange risks of monetary assets and liabilities denominated in foreign currencies, is assessed by comparing the foreign currency position of the hedged monetary assets and liabilities with that of the hedging instruments.

(c) Liquidity risk

Long-term and stable funds, such as fiscal loan funds, government-backed bonds, and FILP agency bonds, are secured to finance this account and deposits are not accepted, with the result that JFC considers liquidity risk to be limited. However, financing costs could increase due to market disturbances and unexpected events.

g. Account for Operations to Facilitate Crisis Responses

The financial assets in this account mainly include loans and financial liabilities against designated financial institutions, and the financial liabilities include borrowings. The associated risks are described below.

(a) Credit risk

The main financial assets in this account are loans of funds to designated financial institutions that are required to conduct Operations to Facilitate Crisis Responses. The associated credit risk consists of risk of losses arising from uncollectable claims due to deterioration in creditworthiness of the designated financial institution.

JFC is liable for compensation to cover losses incurred by designated financial institution on loans to third parties. This account could incur losses if the payment of compensation fluctuates from the projected compensation payments caused by significant changes in the creditworthiness or economic condition of the third party business.

(b) Market risk

The operations of this account consist of loans to designated financial institutions, and fiscal investment and loans and issues of government-backed bonds are used for financing. Interest rate risk is believed to be limited because the loan period and borrowing period are equal, and the financing cost is covered by the interest on the loans.

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(c) Liquidity risk

Long-term and stable funds such as fiscal investment and loans and government-backed bonds are used to finance this account and deposits are not accepted. Sufficient short-term liquidity is secured for compensation payment funds towards designated financial institutions, and liquidity risk is believed to be limited. However borrowings are exposed to liquidity risk if an unexpected event occurs and payment cannot be made on the payment date.

(3) Risk management structure for financial instruments

JFC has a Corporate Governance Committee established to properly conduct management in order to comprehensively handle risks faced, including risks associated with financial instruments, to ensure the sustained and stable realization of the financing policies of the function.

For each type of risk, management policies and procedures have been created to handle the specific types of credit risks, market risks, and liquidity risks for financing associated with each operation, and a structure has been established to smoothly handle these tasks in each operation. The risk management structure for each type of operation is described below.

a. Micro Business and Individual Operations

The risk management structure of these operations is described below.

(a) Credit risk management

For these operations, JFC has a structure to manage the credit risk of loans through (i) individual credit management, (ii) asset self assessment, and (iii) quantification of credit risk in accordance with regulations concerning financing operations and claims management operations, and management regulations concerning credit risk. This credit risk management is conducted by the credit department and risk management department as well as each branch office, and business operations meetings are regularly held with the General Manager acting as chairman to conduct discussions and reporting.

The specific risk management method is described below.

(i) Individual credit management

The financial screening process associated with these operations to support appropriate financing decisions is based on consideration of the borrower’s financial condition in terms of eligibility for financing, validity of the use of funds, profitability and sustainability of the business, as well as the business’s qualitative aspects such as technical capabilities, selling power, and the future potential of the business.

Efforts are made to carefully manage claims after financing has been conducted through assessment of the future business outlook and repayment capacity.

(ii) Asset self assessment

For these operations standards have been established in accordance with the Financial Inspection Manual prepared by the Financial Services Agency to conduct self assessment. In this process, first stage assessments are conducted by the branch offices, second stage assessments by the credit department, and internal inspections by the auditing department. The results of this self assessment are used to properly estimate write-off and allowance, and are used internally for the constant assessment of the credit conditions of the operations. They are also actively used for the disclosure of the quality of assets to enhance the transparency of financial position for the operations.

(iii) Quantification of credit risk

A credit scoring model for borrowers based on analysis of transaction data collected over a number of years has been developed for these operations. Starting in Fiscal Year 2007, credit scores have been assigned to borrowers, and these scores have been used for screening procedures and to monitor credit portfolios since Fiscal Year 2008. The reliability of this scoring model is ensured through continual recalibration based on annual inspections of the model’s accuracy.

In addition, to assess the overall risk of the portfolio, efforts are made to quantify credit risk through methods that take into consideration the extremely diversified nature of the portfolios for these operations.

(b) Market risk management

These operations are subject to the interest rate risk caused by the cash flow gap between assets and liabilities, and the operations could incur losses caused by this risk. Efforts are made to assess interest rate risk in these operations through methods such as maturity ladder analysis and duration analysis, and appropriate risk management is carried out to reduce interest rate risk by diversifying the year of issue for bonds.

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(c) Liquidity risk management related to fund procurement

To conduct proper risk management in these operations, long-term and stable funds such as fiscal loan funds, government-backed bonds, and FILP agency bonds are secured to finance this account and deposits are not accepted. Cash flows are assessed and overdraft facility accounts are established with multiple private sector financial institutions to maintain daily cash flows.

b. Agriculture, Forestry, Fisheries and Food Business Operations

The risk management structure for these operations is described below.

(a) Credit risk management

For these operations, credit risk is properly managed through (i) individual credit management, (ii) credit rating, (iii) asset self assessment, and (iv) quantification of credit risk.

(i) Individual credit management

The screening process for these operations includes screening of the probability of repayment based on eligibility for financing, validity of the financing conditions, and the future potential of the business. Particularly, screening for the certainty of repayment is conducted with a screening standard that gives sufficient consideration to the specific industry (agriculture, forestry, and fisheries) risks. This consists of close examination of the creditworthiness, investment risk, and investment effect of the borrower, and comprehensive verification and confirmation of repayment ability that takes into account feasibility of the payment and repayment plan, and suitability of financing conditions.

Efforts are also made to continuously assess the customer’s economic condition, and maintain and improve the soundness of loan assets through active and detailed support activities.

(ii) Credit rating

These operations strive to maintain and improve the quality of loan assets by using ratings for early discovery of customers with business conditions that could be cause for concern in order to enact business support. Ratings are assigned based on a model built using internal data. The reliability of this scoring model is ensured through continual recalibration based on annual inspection of the model’s discrimination accuracy.

The credit ratings are also used for individual credit management, asset self assessment, and quantification of credit risk as the basis for credit risk management. For this reason reassessment of the credit ratings system is conducted as required.

(iii) Asset self assessment

For these operations standards have been established in accordance with the Financial Inspection Manual prepared by the Financial Services Agency to conduct self assessment.

In this process, first stage assessments are conducted by the branch offices, second stage assessments by the credit department, and internal inspections by the auditing department.

The results of this self assessment are used to appropriately estimate write-off and allowance, and are used internally for the constant assessment of the credit conditions of the operations. They are also actively used for the disclosure of the quality of assets to enhance the transparency of financial position for the operations.

(iv) Quantification of credit risk

To assess the overall risk of the portfolio, credit risks are quantified for internal management in these operations.

(b) Market risk management

The main type of market risk associated with this account is interest rate risk. It is JFC policy to minimize interest rate risk by matching the duration of assets and liabilities. However, due to characteristics such as long redemption periods and fixed interest rates that are required by agriculture, forestry, fisheries policy, duration gaps arise. Efforts are made to assess interest rate risk in these operations through methods such as maturity ladder analysis and duration analysis, and to conduct proper risk management by attempting to reduce interest rate risk through the provision of long-term financing.

(c) Liquidity risk management related with fund procurement

Long-term and stable funds such as fiscal investment and loans and FILP agency bonds are secured to finance this account and deposits are not accepted.

Cash flows are assessed and proper measures including establishing overdraft facility accounts with multiple private sector financial institutions have been taken to maintain daily cash flows for proper risk management.

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c. SME Loan Programs and Securitization Support Programs (Guarantee-type Operation)

The risk management structure for these operations is described below.

(a) Credit risk management

(i) Individual credit management

For financing operations, the financing decision is conducted upon assessment of the situation of company applying for funds from a fair and neutral position and verification of the certainty of repayment and validity of use of funds.

Since these financing operations specialize in long-term funding for businesses, in the screening process, verification assessment is made of the likelihood of long-term repayment focusing on business profits as well as on overall judgment being made on the certainty of repayment.

An overall judgment of the company’s enterprise power is made, not limited to a quantitative analysis focusing on the financial statements, but taking into consideration various management activities including the combination of people, money, and other factors that makes up the company and the future prospects of the company that has applied for funds.

We strive to continuously assess the situation after financing has been granted through review of financial reports and regular company visits. Based on the classification of the borrower or otherwise as required, and after consideration of the results of management improvement plans, follow ups will be conducted as required to define transaction policy.

In addition, in order to support the growth and development of the borrower, we will strive to give as much feedback as possible on the screening results and provide consultation support to help resolve management issues. In particular, we will support companies struggling to respond to changes in the business environment by formulating business improvement plans through methods such as preparing and submitting management improvement proposals.

(ii) Credit rating

A credit scoring model based on analysis of transaction data collected over the years for borrowers has been developed for these operations and has been used in the screening process. In Fiscal Year 2002 this tool was developed for credit rating, and a credit rating system based on a new scoring model was introduced in Fiscal Year 2007 to improve default determination accuracy. In this manner, credit risk is being adequately evaluated.

(iii) Asset self assessment

For these operations standards have been established in accordance with the Financial Inspection Manual prepared by the Financial Services Agency to conduct self assessment. Classification of borrowers is being conducted based on the new credit rating system introduced in Fiscal Year 2007.

First stage assessments of borrower classification and asset type are conducted by the front offices and second stage assessments by a separate credit department. An auditing department independent from the other sections then conducts an internal inspection to verify the accuracy of assessments.

(iv) Quantification of credit risk

In addition to the individual credit management described above, from 2005 we started monitoring and quantifying credit risks to assess the overall risk of the credit portfolio to further improve the efficiency of financing operations and the quantification and management of credit risk.

(v) Credit risk management for securitization support operations

In the securitization support operations since July, 2004, we have used scoring models such as our proprietary creditworthiness measurement tool which was developed based on the analysis of transaction data collected over the years for SMEs, and a Credit Risk Database (CRD) to conduct screening. In addition, statistical methods such as Monte Carlo simulations are used to accurately assess the overall credit risk for pools of claims to establish a proper guarantee rate based on credit risk.

After guarantees have been conducted, accurate assessment of credit risk is conducted through confirmation of the repayment status, submission of financial reports, and regular reassessment of the pool of claims.

(b) Market risk management

(i) Interest rate risk

The main type of market risk associated with these operations is interest rate risk. It is JFC policy to minimize interest rate risk by matching the cash flows between assets and liabilities. However, not all cash flows can be matched, so some gaps do arise between assets and liabilities. Efforts are made to assess interest rate risk in these operations through methods such as maturity ladder analysis and duration analysis, and conduct proper risk management by attempting to reduce interest rate risk by diversifying the year of issue for bonds.

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(ii) Exchange rate risk

It is JFC policy to fully hedge through use of currency swaps, the exchange rate risk of issues of foreign-currency denominated debt securities. The counterparty risk associated with swaps is managed through regular assessment of the fair value and risk exposure of the swap transaction for counterparties, and the creditworthiness of counterparties.

(c) Liquidity risk management related to fund procurement

Long-term and stable funds such as fiscal loan funds, government-backed bonds, and FILP agency bonds are secured to finance this account and deposits are not accepted.

Cash flows are assessed and proper measures including establishing overdraft facility accounts with multiple private sector financial institutions, have been taken to maintain daily cash flows for proper risk management.

d. Securitization Support Programs (Purchase-type Operation)

The risk management structure for these operations is described below.

(a) Credit risk management

In the securitization support operations, we use scoring models such as our proprietary creditworthiness measurement tool developed based on analysis of transaction data collected over a number of years for SMEs, and a CRD (Credit Risk Database) to conduct screening. In addition, statistical methods such as Monte Carlo simulations are used to accurately assess the overall credit risk for pools of claims to establish a proper return based on credit risk.

(b) Market risk management

The main type of market risk associated with these operations is interest rate risk.

It is JFC policy to minimize interest rate risk by matching the cash flows between assets and liabilities, and we believe that interest rate risk is limited.

(c) Liquidity risk management related with fund procurement

It is believed that liquidity risk is limited because a system has been adopted to minimize liquidity risk and sufficient funding support can be expected from the government.

e. Credit Insurance Programs

The risk management structure for these operations is described below.

Financing is provided from government funds. Efforts are made for proper risk management through the assessment of cash flows.

f. JBIC Operations

The risk management structure for these operations is described below.

(a) Credit risk management

The basis of credit risk management is centered on individual credit management based on the creditworthiness of the borrower during the credit approval process.

When a new credit application is processed, the relevant finance departments (sales promotion department) and credit departments collect and analyze information on the borrower. The overseas representative offices also play a part in collecting information on foreign governments and corporations. Credit appraisal takes place based on the information that has been gathered and analyzed, with the different departments ensuring appropriate check throughout the process, leading to the final decision by the management.

For lending to foreign governments and corporations, JFC makes most use of its position as a public institution and exchanges views and information with governments and other authorities in recipient countries, international institutions such as the IMF and the World Bank, other regional development banks and official export credit agencies as well as private financial institutions in the industrial countries. Using all these channels, JFC evaluates sovereign or country risk (risk in addition to corporate risk associated with the country in which the corporation is located) based on a broad range of information on government and government agency borrowers as well as political and economic conditions in their countries.

The relevant finance departments and credit departments conduct proper credit risk management based on the credit risk rating system for segmented risk categories and the asset self assessment system based on the Financial Inspection Manual. In addition, an Integrated Risk Management Committee is held regularly to report the status of credit management to the management. The credit management situation is also checked by an independent auditing department.

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In addition, a claims protection mechanism exists based on an international framework unique to official creditors, that is not contained in private sector financial institutions, for official claims on foreign governments. This mechanism consists of international financial assistance upon international approval by the Paris Club, an international group focusing on debt, to allow the debtor country to continue debt repayment when the debtor country becomes temporarily unable to service its debt due to economic conditions. As part of this international financial assistance, the debtor country conducts an economic reform program upon agreement with the IMF in order to secure the ability to sustainably service its debt. In view of JFC’s position as a public financial institution, it will use the framework of the Paris Club to preserve its official claims on foreign governments.

Besides the individual credit management outlined above, credit risks are quantified to assess the overall risk of the portfolio in these operations. To quantify credit risks, it is important to take into account the characteristic of the loan portfolio, that there are a significant proportion of long-term loans and loans involving sovereign risk or country risk. Also to be taken into account is the mechanism of securing assets, such as the framework of international financial assistance to debtor countries through the Paris Club, which is unique to official creditors. This account uses a unique model to quantify the credit risk taking account of the above explained elements and measures amount of credit risk, which are utilized for credit risk management.

(b) Market risk management

ALM is used to manage exchange rate risk and interest rate risk for these operations. Market risk management protocols contain detailed stipulations of risk management methods and procedures, which are used by the ALM Committee to assess and confirm the execution of ALM, and for discussions concerning future responses. In addition, monitoring is conducted through gap analysis and interest rate sensitivity analysis to comprehensively assess the interest and terms of financial assets and liabilities. The results are regularly reported to the ALM Committee

The basic policy for managing exchange rate risk and interest rate risk in these operations is described below.

(i) Exchange rate risk

Foreign currency-denominated loans conducted in these operations involve risks related to exchange rate fluctuations. We have a consistent policy of managing this risk by fully hedging this risk exposure through the use of currency swaps and forward foreign exchange transactions.

(ii) Interest rate risk

Interest rate risk arises from exposure to market interest rate fluctuations for yen-denominated loan and foreign currency-denominated loan operations and the policy for managing interest rate risk is described below.

 Yen-denominated loan operations

For the most part, funding for yen-denominated loans is managed at fixed-rate interest. Currently, interest rate risk for yen-denominated loans is limited since maturity of loans and the related funding arrangements are generally matched. In addition, swaps are used to hedge interest rate risk for portions of loans that are thought to have high exposures to interest rate fluctuation risk.

‚ Foreign currency-denominated loan operations

For foreign currency-denominated loan operations, interest rate risk is hedged through the consistent policy of using interest rate swaps and managing funds with floating interest rates for both loans and related funding arrangements.

(c) Liquidity risk management related to fund procurement

Long-term and stable funds such as fiscal loan funds, government-backed bonds, and FILP agency bonds are used to finance these operations and deposits are not accepted.

Cash flows are assessed and proper measures including establishing overdraft facility accounts with multiple private sector financial institutions are taken to maintain daily cash flows for proper risk management.

(d) Derivatives transactions

A protocol of internal checks with separate divisions executing transactions, assessing the effectiveness of hedges, and conducting office management has been established for derivatives transactions, and these transactions are conducted according to derivatives-related regulations.

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g. Operations to Facilitate Crisis Responses

The risk management structure for these operations is described below.

(a) Credit risk management

For these operations standards have been established in accordance with the Financial Inspection Manual prepared by the Financial Services Agency to conduct asset self assessment. In the asset self assessment, an inspection is conducted by the auditing department.

(b) Market risk management

        These operations consist of loans to designated financial institutions, and fiscal investment and loans and issues of government-backed bonds are used for financing. The loan period and borrowing period are equal.

(c) Liquidity risk management related to fund procurement

Long-term and stable funds such as fiscal investment and loans and government-backed bonds are secured to finance this account and deposits are not accepted. In addition, the loan period and borrowing period are equal. Sufficient short-term liquidity is secured for compensation payment funds towards designated financial institutions, and liquidity risk is believed to be limited. In addition, continual efforts are being made to make financing plans more sophisticated and minimize liquidity risk.

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(4) Supplementary explanation concerning fair value of financial instruments

The fair value of financial instruments includes amounts based on market value and amounts that have been reasonably estimated when no market value is available. Set valuation inputs are used for the calculation of this amount, and if different valuation inputs are used the resulting amount could vary.

2. Fair value of financial instruments

The amount in the balance sheets at March 31, 2010, and the related fair value, and difference is as follows. Note that unlisted securities whose fair value is extremely difficult to be determined are not included in the following chart (refer to Note 3).

(In millions of yen)

	Amount on Balance Sheet			Fair value		Difference
(1) Cash and due from banks	¥	3,734,767		¥	3,735,638	¥	870
(2) Securities
Held to maturity debt securities		25,113			26,100		986
(3) Loans and bills discounted		29,178,591
Allowance for loan losses (*1)		(419,160	)
		28,759,431			29,305,931		546,500
Total assets		32,519,312			33,067,670		548,358
(1) Borrowings (2) Bonds payable (3) Entrusted funds		21,088,589 5,949,515 37,288			21,397,131 6,101,298 27,858		308,541 151,782 (9,429	)
Total liabilities		27,075,393			27,526,288		450,894
Derivative transactions (*2) Derivative transactions not qualifying for hedge accounting Derivative transactions qualifying for hedge accounting		—   691,423			—   691,423		—   —
Total derivative transactions	¥	691,423		¥	691,423	¥	—

(*1) General allowance for loan losses and specific allowance for loan losses have been deducted from loans.

(*2) Derivatives recorded in “other assets and other liabilities” are collectively displayed.

The net values of assets and liabilities arising from derivative transactions are displayed. The figures in parenthesis indicate net liabilities.

(Note 1)  Valuation methodologies used for estimating fair values for financial instruments

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Assets

(1) Cash and due from banks

For Due from banks that do not mature or have a maturity under 3 months, the carrying amount is used as fair value because fair value resembles the carrying amount approximates to the fair value. For due from banks that have a maturity over 3 months, fair value is based on the present value calculated by discounting future cash flow by the risk free rate (the standard Japanese government bond rate) based on the appropriate deposit term.

(2) Securities

Market value is used for securities. However for corporate bonds in the Account for SME Loan Programs and Securitization Support Programs (Guarantee-type Operation), the carrying amount is used as fair value because fair value approximates the carrying amount.

Notes for securities by purpose of holding are found in “note 17. Market Value of Securities”.

(3) Loans and bills discounted

Loans, including loans with variable interest rates and loans with fixed interest rates, are calculated as follows.

a. Account for Micro Business and Individual Operations

All loans have a fixed interest rate and fair value is calculated by discounting the principal and interest by the interest rate assumed to be used if a new loan were conducted based on the type and period of loan.

However for claims that are not performed or could default, allowance for loan losses is provided based on the expected collectable amount from the collateral or guarantee. Fair value approximates the amount on the balance sheet on the closing date net of the allowance for loan losses, and therefore, this amount is used for fair value.

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b. Account for Agriculture, Forestry, Fisheries and Food Business Operations

All loans have a fixed interest rate and fair value is calculated by discounting the risk-reflected principal and interest that incorporates risk by the risk free rate (the standard Japanese government bond rate) based on the type of borrower and period of loan.

c. Account for SME Loan Programs and Securitization Support Programs (Guarantee-type Operation)

All loans have a fixed interest rate and fair value is calculated for borrowers in possibility of bankruptcy by discounting the risk-adjusted principal and interest by type of borrower using the risk free rate (the standard Japanese government bond rate). However for obligations on bankrupt borrowers or substantially bankrupt borrowers, allowance for loan losses is provided based on the expected collectable amount from the collateral or guarantee. Fair value resembles the amount on the balance sheet on the closing date net of allowance for loan losses, and therefore, this amount is used for fair value.

d. Account for Securitization Support Programs (Purchase-type Operation)

Not applicable

e. Account for Credit Insurance Programs

Not applicable

f. Account for JBIC Operations

For loans with variable interest rates an amount calculated by the floating rate note method to reflect market interest rates over the short term is used for fair value.

For loans with fixed interest, the total principal and interest is discounted by a risk free rate that incorporates the default ratio and coverage ratio to calculate fair value. However for obligations on bankrupt borrowers, substantially bankrupt borrowers, and potentially bankrupt borrowers a provision for bad debt is calculated based on the expected collectable amount from the collateral or guarantee. Fair value approximates the amount on the balance sheet on the closing date after a deduction has been made for the provision for bad debt, so this amount is used for fair value.

g. Account for Crisis Response Operations

All loans have a fixed interest rate and fair value is calculated by discounting the principal and interest by type of borrower and period of loan using the interest rate estimated from the market yield of bonds issued by the borrower.

Liabilities

(1) Borrowings

Borrowings with variable interest rates indicates that short-term market interest rates and the credit conditions of JFC are not significantly altered by borrowings. Therefore, the carrying amount is used as fair value because it is believed that the carrying amount approximates the fair value. For borrowings with a fixed interest rate, in principle, fair value is calculated by discounting the principal and interest of the borrowings by the risk free rate (the standard Japanese government bond rate) based on the set period of loan.

(2) Bonds payable

Market value is used for fair value of bonds. However, bonds that are subject to hedging with forward contracts are treated as yen-denominated bonds with fixed interest, and the fair value is calculated by discounting the principal and interest of the borrowings by the risk free rate (the standard Japanese government bond rate).

(3) Entrusted funds

Fair value is calculated by discounting the principal and interest of the entrusted fund by the risk free rate (the standard Japanese government bond rate) based on the set period.

Derivative transactions

Derivative transactions are discussed under note 18 “Derivative transactions”.

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(Note 2) For credit insurance underwriting, the credit decision is conducted by a specified financial institution, and it is the structure for JFC not to participate in the credit decision for the individual subject to compensation at the time of loan, and therefore JFC does not retain the financial data of the individuals subject to compensation. Accordingly, it is recognized that fair value is extremely difficult to be determined.

The amount of compensation underwritten for compensation security contract is as follows.

Balance of compensation underwritten: ¥1,242,750 million.

Compensation loss reserve: ¥87,310 million.

(Note 3) Financial instruments that are recognized to be extremely difficult to be determined fair value are as follows.

They are not included in “Assets, (2) Securities” or “Liabilities, (1) Borrowings”

	(In millions of yen)
Classification	Carrying amount on balance sheet
1) Unlisted stocks (*1)	¥	22,529
2) Corporate bonds (specified asset-backed securities) (*2)		2,131
3) Other securities (trust beneficiary securities) (*2)		3,242
4) Partnership investments (*3)		23,780
5) Borrowings from general account of the national budget (*4)		131,300
6) Borrowings from the FILP special account (investment account) of the national budget (*5)		770
Total	¥	183,754

(*1) Since unlisted stocks do not have quoted market prices available and fair value is extremely difficult to be determined, fair values are not stated.

(*2) Corporate bonds (specified asset-backed securities) and other securities (trust beneficiary securities) do not have a market value.

These are securities issues backed by loan claims on SMEs originating from multiple financial institutions. The following steps are followed when constructing the subordination structure for the securities:

(1) First, groups of loan claims from the financial institutions are put into sub-pools, and the most subordinated section is removed;

(2) The remainder of the sub-pool besides the most subordinated section is treated as an amalgamate and divided into levels of senior and subordinate

For this reason, to evaluate the fair value of other securities (trust beneficiary securities) owned by JFC that have been amalgamated , the individual financial data for the borrowers that back the securities issue is required. Because JFC is not structured to continuously acquire this data, fair value is extremely difficult to be determined and is not stated.

(*3) For partnership investments composed of unlisted stocks that do not have quoted market prices available and for which fair value is extremely difficult to be determined fair values are not stated.

(*4) For borrowings from general account of the national budget, fair values are not stated because it is recognized that fair value is extremely difficult to be determined because no redemption period is stipulated and it is not possible to reasonably estimate future cash flows.

(*5) For borrowings from the FILP special account (investment account) of the national budget, fair values are not stated because it is recognized that fair value is extremely difficult to be determined for the following reason: an interest rate is not set at the time of borrowing, as this type of borrowing consists of a scheme in which a lump interest payment is made after the final installment payment redemption and it is not possible to reasonably estimate future cash flows.

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(Note 4) Redemption schedule for receivables and redeemable securities with future redemption dates

	(In millions of yen)
	Maturities within one year		Maturities after one year but within three years		Maturities after three years but within five years		Maturities after five years but within seven years		Maturities after seven years but within ten years		Maturities after ten years
Due from banks (*1)		3,734,531		—		—		—		—		—
Securities (*2) Held-to-maturity debt securities		3,913		40		—		20,983		—		—
Loans and bills discounted (*2)		3,952,780		8,630,361		6,928,240		3,759,705		2,824,098		2,508,571
Total		7,691,224		8,630,401		6,928,240		3,780,689		2,824,098		2,508,571

(*1) Demand deposits contained within due from banks are stated as “Maturities within one year”.

(*2) Within loans and securities, claims against bankrupt borrowers, substantially bankrupt borrowers, and potentially bankrupt borrowers contains an amount of ¥467,832 million that is not expected to be redeemed and not included in the table above. In addition, in the Account for Micro Business and Individual Operations, there are claims of ¥107,027 million that have redemption problems or could default, and are not expected to be redeemed. This amount is not included in the table, either.

(Note 5) Redemption schedule for bonds and borrowings with future redemption dates

	(In millions of yen)
	Maturities within one year		Maturities after one year but within three years		Maturities after three years but within five years		Maturities after five years but within seven years		Maturities after seven years but within ten years		Maturities after ten years
Borrowings (*)		3,229,606		6,086,052		6,472,809		2,725,039		1,751,760		824,091
Bonds payable		1,106,900		2,352,810		1,502,530		581,476		310,000		100,000
Entrusted fund		—		—		—		62		1,522		35,704
Total		4,336,506		8,438,862		7,975,339		3,306,578		2,063,283		959,795

(*) In borrowings, ¥131,300 million of general accounting investments with no redemption period stipulated are not included.

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Current Fiscal Year (April 1, 2010 to March 31, 2011)

1. Status of financial instruments

(1) Initiatives for financial instruments

Based on the JFC Act, we are a governmental financial institution founded for the purpose of supplementing the financing conducted by general financial institutions and contributing to the development of the Japanese and global economic society and the improvement of the lifestyle of citizens.

The budget required for governmental financial operations is decided on by the Diet of Japan, and business plans and financial plans (funds for the fiscal investment and loans, bonds, general accounting investment, equity participation, etc.) are appended to the budget and submitted to the Diet of Japan.

These operations are classified into Micro Business and Individual Operations; Agriculture, Forestry, Fisheries and Food Business Operations; SME Loan Programs and Securitization Support Programs (Guarantee-type Operation); Securitization Support Programs (Purchase-type Operation); Credit Insurance Programs; JBIC Operations, Financial Operations for Facilitating Realignment of United States Forces in Japan; Operations to Facilitate Crisis Responses; and Operations to Facilitate Specific Businesses Promotion. Accounts are made for each classification (“operation account”) for accounting treatment.

The funds procured by JFC for the fiscal investment and loans, bonds, general accounting investment are managed separately by each operation account. In principle, it is assumed that funds intended for one operation account will not be used for another operation account. Accordingly, ALM is conducted for the risks associated with financial assets and liabilities for each operation account. Note that financial instruments that can be used for the management of surplus funds are limited to extremely safe instruments such as Japanese government bonds, etc., as stipulated by The JFC Act.

The Account for Micro Business and Individual Operations is for operations, such as business fund financing and educational loans, etc., aimed at micro businesses and individuals. To conduct these operations funds are raised through the borrowing of fiscal investment funds and loans and the issuing of bonds. ALM is conducted for financial assets and liabilities in this account to ensure that interest rate fluctuations do not have an adverse effect on these operations.

In the Account for Agriculture, Forestry, Fisheries and Food Business Operations, the main operations consist of supplementing the financing provided by general financial institutions and supplying long-term funds at a low interest rate aimed at businesses engaged in agriculture, forestry, fisheries and food manufacturing, etc., in order to contribute to the sustainable and robust development of the agriculture, forestry, and fisheries business and ensure the stable supply of food. To conduct these operations funds are raised through borrowing from fiscal investment funds and loans and the issuing of bonds. ALM is conducted for the risks inherent in the financial assets and liabilities in this account.

In the Account for SME Loan Programs and Securitization Support Programs (Guarantee-type Operation), a stable supply of long-term funds is provided to supplement private sector financial institutions in order to support the growth and development of SMEs. To conduct these operations, funds are raised primarily through indirect financing by borrowing from the government and direct financing through the issuing of bonds. Also, derivative transactions are conducted for the purpose of mitigating risk inherent in foreign currency denominated transactions.

Operations in the Account for Securitization Support Programs (Purchase-type Operation) are conducted for the purpose of promoting the supply of unsecured funds to SMEs from private sector financial institutions, etc., utilizing securitization and fostering the securitization market for SME loan claims. To conduct these operations funds are raised through direct financing through the issuing of bonds.

In the Account for Credit Insurance Programs, insurance is provided for the guarantees related to the liabilities on SME loans. To conduct these operations funds are raised through capital investment from the government.

The purpose of the Account for JBIC Operations is to conduct the financing required for “Promoting overseas development and acquisition of strategically important natural resources to Japan”, “Maintaining and improving the international competitiveness of Japanese industries”, “Promoting overseas projects for conserving the global environment, such as mitigating global warming”, and “Taking appropriate measures with respect to disruptions to international financial order”. Principal operations consist of providing export loans, import loans, investment financing, financing for business development and capital investment (including guarantees except for “capital investment”). To conduct these operations funds are raised through borrowing from the fiscal investment funds and loans and the issuing of bonds. ALM is conducted for financial assets and liabilities in this account that are subject to interest-rate and currency fluctuations to ensure that interest-rate and currency fluctuations do not have an adverse effect on these operations. Also, derivative transactions are conducted for the purpose of mitigating risk inherent in foreign currency denominated transactions.

        In the Financial Account Related to the Financing Operations for Facilitating Realignment of United States Forces in Japan, this account implements, in this fiscal year, necessary operations related to providing loans to necessary projects for promoting the relocation of U.S. forces stationed in Japan. However, this account has not yet executed loans nor procured funds in this fiscal year.

        In the Account for Operations to Facilitate Crisis Responses, financing operations including 1) loans, 2) credit insurance underwriting (a certain portion of compensation paid by JFC to cover losses incurred by specified financial institutions on loans, including equity participation), and 3) interest subsidies (interest subsidies provided by JFC to specified financial institutions for loans, etc., conducted by specified financial institutions that received a credit facility from JFC) are conducted for financial institutions specified by the competent minister for domestic and global financial disturbance recognized by the competent minister when a crisis such as a large-scale disaster occurs. To conduct these operations, the financing required for 1) loans is procured through the borrowing from Fiscal Investment and Loan Program (“FILP”), and the issuing of government guaranteed bonds. The loan period and borrowing period are equal, and the financing cost is covered by the interest on the loans. The financing required for 2) credit insurance underwriting, and 3) interest subsidies is procured through equity participation from the government.

The Account for Operations to Facilitate Specific Businesses Promotion provides loans to designated financial institutions appointed by the competent minister in order to assist in the smooth financing of required funds for the execution of business by companies that develop or manufacture energy and environmentally friendly products. The required funds for these lending operations are financed using fiscal investment and loans. The loan period and borrowing period are equal, and the financing cost is covered by the interest on the loans.

(2) Types of financial instruments and risks

The financial assets and liabilities owned by JFC are managed in separate operation accounts, and the risks associated with the financial assets and liabilities contained within each account are described below.

a. Account for Micro Business and Individual Operations

The financial assets in this account mainly include loans to micro business and individuals in Japan, and the financial liabilities mainly include borrowings and bonds. The associated risks are described below.

(a) Credit risk

The associated credit risk consists of risk of losses arising from uncollectable claims on business and educational loans from deterioration in creditworthiness or fluctuation in the value of the real estate-collateral of the entity to which credit is granted.

For this operation account, JFC strives to make a proper financing decision in the financial screening process, conducts detailed claims management based on the condition of the borrower after financing is provided, uses statistical management methods, and increases the sophistication of management methods employed. In addition, risks are dispersed as the credit portfolio is comprised of small business and educational loans that are not concentrated in a specified region or industry. However, based on future economic trends and changes in the business climate of borrowers, the number of borrowers with deteriorated creditworthiness could increase, bringing about requests for financial support including loan restructuring, causing an increase in uncollectable claims and credits costs for this account.

(b) Market risk

The main type of market risk associated with this account is interest rate risk.

It is JFC policy to minimize interest rate risk by matching the cash flows between assets and liabilities. However, not all cash flows can be matched, so some gaps arise between assets and liabilities. This account could incur losses from the interest rate risk caused by this gap.

(c) Liquidity risk

Long-term and stable funds such as fiscal loan funds, government-backed bonds, and the FILP agency bonds are secured to finance this account and deposits are not accepted. To maintain daily cash flows, proper measures including establishing overdraft facility accounts with several private sector financial institutions have been taken, and JFC considers liquidity risk to be limited. However, financing costs could increase due to unexpected events.

b. Account for Agriculture, Forestry, Fisheries and Food Business Operations

The financial assets in this account mainly include loans to agriculture, forestry, fisheries and food businesses, and financial liabilities mainly include borrowings, bonds, and entrusted funds. The associated risks are described below.

(a) Credit risk

The associated credit risk consists of risk of losses arising from uncollectable claims on credit to agriculture, forestry, fisheries and food businesses from deterioration in creditworthiness or fluctuation in the value of the real estate-collateral of the entity to which credit is granted. For this reason, efforts are made to maintain and improve the soundness of assets through proper financial screening and account management throughout the year.

However, among the majority of borrowers that make up this account, there are many small businesses in the agriculture, forestry, fisheries sector. These businesses are especially susceptible to natural conditions such as weather, etc., so depending on future conditions, uncollectable claims and credits costs for this account could increase.

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(b) Market risk

The main type of market risk associated with this account is interest rate risk.

It is JFC policy to minimize interest rate risk by matching the duration of assets and liabilities. However, due to characteristics such as long redemption periods and fixed interest rates that are required by agriculture, forestry, and fisheries policy, duration gaps do arise. This account could incur losses from the interest rate risk caused by this gap.

(c) Liquidity risk

Long-term and stable funds such as fiscal loan funds, government-backed bonds, and the FILP agency bonds are secured to finance this account and deposits are not accepted. Cash flows are assessed and proper measures are taken, including establishing overdraft facility accounts with multiple private sector financial institutions, to maintain daily cash flows, and JFC considers liquidity risk to be limited. However, financing costs could increase due to unexpected events.

c. Account for SME Loan Programs and Securitization Support Programs (Guarantee-type Operation)

The financial assets in this account mainly include loans and securities for SMEs, and financial liabilities mainly include borrowings and bonds. The associated risks are described below.

(a) Credit risk

The following operations are conducted in this account: (1) Loans to SMEs, (2) Acquisition of bonds issued by SMEs, (3) Securitization of loan claims and bonds of SMEs, and (4) Partial guarantee of loan claims for private sector financial institutions and partial guarantee of securitized financial products. Because credit is provided to SMEs, this account could incur uncollectable claims and losses caused by deterioration in creditworthiness or fluctuation in the value of the real estate-collateral of the SMEs to which credit is granted.

(b) Market risk

The main types of market risk associated with this account are interest rate risk and exchange rate risk.

It is JFC policy to minimize interest rate risk by matching the cash flows between assets and liabilities. However, not all cash flows can be matched, so some gaps arise between assets and liabilities. This account could suffer losses from the interest rate risk caused by this gap.

The exchange rate risk associated with the issue of foreign currency-denominated bonds also applies to this account. However this risk is fully hedged through currency swaps.

(c) Liquidity risk

Long-term and stable funds such as fiscal loan funds, government-backed bonds, and FILP agency bonds are secured to finance this account and deposits are not accepted. Cash flows are assessed and proper measures including establishing overdraft facility accounts with multiple private sector financial institutions are taken to maintain daily cash flows, and JFC considers liquidity risk to be limited. However, financing costs could increase due to unexpected events.

d. Account for Securitization Support Programs (Purchase-type Operation)

The financial assets in this account mainly include securities for SMEs, and financial liabilities mainly include bonds. The associated risks are described below.

(a) Credit risk

The following operations are conducted in this account: (1) Receipt and securitization of loan claims for private sector financial institutions and (2) Partial purchase of securitized instruments. Since credit is provided to SMEs in this account, the account risks losses arising from uncollectable claims caused by deterioration in creditworthiness of the SMEs to which credit is granted and the resulting drop in value of securitized instruments owned.

(b) Market risk

The main type of market risk associated with this account is interest rate risk.

It is JFC policy to minimize interest rate risk by matching the cash flows between assets and liabilities.

(c) Liquidity risk

Long-term and stable funds such as FILP agency bonds are secured to finance this account and deposits are not accepted. Proper measures, including establishing overdraft facility accounts with multiple private sector financial institutions, are taken to maintain daily cash flows, and JFC considers liquidity risk to be limited. However, financing costs could increase due to unexpected events.

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e. Account for Credit Insurance Programs

The financial assets in this account mainly include deposits and securities. The associated risks are described below.

(a) Market risk

The market risk that this account is exposed to mainly comprises interest rate risk.

However, this account is exposed to limited interest rate risk because funds procured through government investments are managed using highly stable instruments including Japanese government bonds.

(b) Liquidity risk

This account does not accept deposits and since long-term stable funds such as investments from the Japanese government are secured to finance this account, and liquidity risk is considered to be limited.

f. Account for JBIC Operations

The assets in this account mainly include loans to borrowers in Japan and overseas, and securities, and liabilities mainly include borrowings and bonds. The associated risks are described below.

(a) Credit risk

Credit risk is the risk that the account will suffer losses if the financial condition of the borrower deteriorates and the value of assets (including off-balance sheet assets) decrease or disappear.

The credit risks associated with this account include sovereign risk, country risk, corporate risk, and project risk. Characteristic of support for overseas economic transactions conducted in this account, much financing is conducted for overseas governments, governmental institutions, and overseas corporations. Much of the credit risk associated with the credit provided typically consists of sovereign or country risk.

As a result, if the financial condition of the individual borrower significantly deteriorates due to political and economic trends in the borrower’s country or region, the performance and financial condition of these operations can be adversely affected.

(Note) Sovereign risk refers to risk associated with credit supplied to foreign governments, country risk refers to risk associated with the country in which the corporation or project is located (risk, in addition to corporate risk or project risk, associated with the country in which the corporation or the project is located), and corporate risk refers to the risk associated with credit to corporations and project risk refers to the risk that the cash flow of an underlying project will not perform as planned, in the case of project finance, where the repayment of the borrowing is primarily secured by the cash flow of the project to which credit is supplied.

(b) Market risk

Market risk is the risk that the value of assets and liabilities (including off-balance sheet assets) will fluctuate and losses will be incurred, or profits derived from assets and liabilities (including off-balance sheet assets) will fluctuate and losses will be incurred due to the fluctuation of various market risk factors such as interest rates, exchange rates, etc.

The market risk associated with this account mainly consists of exchange rate risk and interest rate risk, and losses could be suffered from these risks from market fluctuations. However, in principle, these risks are mitigated through interest rate swaps, currency swaps, and forward exchange transactions.

In this account hedge accounting is used for interest rate hedges, where the hedging instruments are interest rate swaps to hedge the market fluctuation risk associated with loans, borrowed money and bonds. The effectiveness of the hedges is assessed by measuring and comparing the change in fair value or cumulative change in cash flows of both hedging instruments and corresponding hedged items from the date of inception of the hedges to the assessment date.

In this account hedge accounting is used for foreign exchange hedges, where currency swaps and foreign exchange forward contracts are used to hedge items such as loans, borrowings, and bonds for exchange rate fluctuation risk. The effectiveness of the hedging currency-swaps and forward contracts, hedging the foreign exchange risks of monetary assets and liabilities denominated in foreign currencies, is assessed by comparing the foreign currency position of the hedged monetary assets and liabilities with that of the hedging instruments.

(c) Liquidity risk

Long-term and stable funds, such as fiscal loan funds, government-backed bonds, and FILP agency bonds, are secured to finance this account and deposits are not accepted, with the result that JFC considers liquidity risk to be limited. However, financing costs could increase due to market disturbances and unexpected events.

g. Financial Account Related to the Financial Operations for Facilitating Realignment of United States Forces in Japan

         As no lending was executed in this account which was launched in this fiscal year, the only financial assets held in this account are cash deposits. Accordingly there are no financial liabilities present, and the following risks are considered to be limited.

(a) Market risk

Market risk is the risk that the value of assets and liabilities (including off-balance sheet assets) will fluctuate and losses will incurred, or profits derived from assets and liabilities (including off-balance sheet assets) will fluctuate and losses will incurred due to the fluctuation of various market risk factors such as interest rates, exchange rates, etc.

In this fiscal year, the only financial assets or liabilities held in this account are cash deposits, therefore market risk is considered to be limited.

(b) Liquidity risk

The liquidity risk of this account is considered to be limited since it does not accept deposits nor has executed a loan in this fiscal year. In addition to that, it secures stable funds from government grants only.

h. Account for Operations to Facilitate Crisis Responses

         The financial assets in this account mainly include loans and financial liabilities against designated financial institutions, and the financial liabilities include borrowings. The associated risks are described below.

(a) Credit risk

The main financial assets in this account are loans of funds to designated financial institutions that are required to conduct Operations to Facilitate Crisis Responses. The associated credit risk consists of risk of losses arising from uncollectable claims due to deterioration in creditworthiness of the designated financial institution.

JFC is liable for compensation to cover losses incurred by designated financial institution on loans to third parties. This account could incur losses if the payment of compensation fluctuates from the projected compensation payments caused by significant changes in the creditworthiness or economic condition of the third party business.

(b) Market risk

The operations of this account consist of loans to designated financial institutions, and fiscal investment and loans are used for financing. Interest rate risk is not present as a type of market risk because the terms and conditions of the loans and borrowings are equal and the financing cost is covered by the interest on the loans.

(c) Liquidity risk

Long-term and stable funds such as fiscal investment and loans and government-backed bonds are used to finance this account and deposits are not accepted. Sufficient short-term liquidity is secured for compensation payment funds towards designated financial institutions, and liquidity risk is considered to be limited. However borrowings are exposed to liquidity risk if an unexpected event occurs and payment cannot be made on the payment date.

i. Account for Operations to Facilitate Specific Businesses Promotion

The financial assets in this account mainly include loans and financial liabilities against financial institutions, and the financial liabilities include borrowings. The associated risks are described below.

(a) Credit risk

The main financial assets in this account are loans to designated financial institutions that are required to conduct specific businesses promotion operations. The associated credit risk consists of risk of losses arising from uncollectable claims due to deterioration in creditworthiness of the designated financial institution.

(b) Market risk

The operations of this account consist of loans to designated financial institutions, and fiscal investment and loans are used for financing. Interest rate risk is not present as a market risk because the terms and conditions of the loans and borrowings are equal, and the financing cost is covered by the interest on the loans.

(c) Liquidity risk

Long-term and stable fiscal investment and loans are used to finance this account and deposits are not accepted. As a result, liquidity risk is considered to be limited. However, borrowings are exposed to liquidity risk that payment cannot be made on the payment date due to unexpected events.

(3) Risk management structure for financial instruments

        JFC has a Corporate Governance Committee established to properly conduct management in order to comprehensively handle risks faced, including risks associated with financial instruments, to ensure the sustained and stable realization of the financing policies of the function.

For each type of risk, management policies and procedures have been created to handle the specific types of credit risks, market risks, and liquidity risks for financing associated with each operation, and a structure has been established to smoothly handle these tasks in each operation. The risk management structure for each type of operation is described below.

a. Micro Business and Individual Operations

The risk management structure of these operations is described below.

(a) Credit risk management

For these operations, JFC has a structure to manage the credit risk of loans through (i) individual credit management, (ii) asset self assessment, and (iii) quantification of credit risk in accordance with regulations concerning financing operations and claims management operations, and management regulations concerning credit risk. This credit risk management is conducted by the credit department and risk management department as well as each branch office, and business operations meetings are regularly held with the General Manager acting as chairman to conduct discussions and reporting.

The specific risk management method is described below.

(i) Individual credit management

The financial screening process associated with these operations to support appropriate financing decisions is based on consideration of the borrower’s financial condition in terms of eligibility for financing, validity of the use of funds, profitability and sustainability of the business, as well as the business’s qualitative aspects such as technical capabilities, selling power, and the future potential of the business.

Efforts are made to carefully manage claims after financing has been conducted through assessment of the future business outlook and repayment capacity.

(ii) Asset self assessment

        For these operations standards have been established in accordance with the Financial Inspection Manual prepared by the Financial Services Agency to conduct self assessment. In this process, first stage assessments are conducted by the branch offices, second stage assessments by the credit department, and internal inspections by the auditing department. The results of this self assessment are used to properly estimate write-off and allowance, and are used internally for the constant assessment of the credit conditions of the operations. They are also actively used for the disclosure of the quality of assets to enhance the transparency of financial position for the operations.

(iii) Quantification of credit risk

A credit scoring model for borrowers based on analysis of transaction data collected over a number of years has been developed for these operations. Starting in Fiscal Year 2007, credit scores have been assigned to borrowers, and these scores have been used for screening procedures and to monitor credit portfolios since Fiscal Year 2008. The reliability of this scoring model is ensured through continual recalibration based on annual inspections of the model’s accuracy.

In addition, to assess the overall risk of the portfolio, efforts are made to quantify credit risk through methods that take into consideration the extremely diversified nature of the portfolios for these operations.

(b) Market risk management

These operations are subject to the interest rate risk caused by the cash flow gap between assets and liabilities, and the operations could incur losses caused by this risk. Efforts are made to assess interest rate risk in these operations through methods such as maturity ladder analysis and duration analysis, and appropriate risk management is carried out to reduce interest rate risk by diversifying the year of issue for bonds.

These operations do not use quantitative analysis of interest rate risk for risk management purposes.

The primary financial instruments that are subject to interest rate risk in these operations include loans and bills discounted, borrowed money and bonds payable.

         When all other risk variables are fixed, it is considered that a 50 basis point (0.5%) decline in the current interest rate as of March 31, 2011 will cause the fair value after netting of the financial assets and financial liabilities held in this account to increase by ¥55,453 million ($667 million). Conversely, it is considered that a 50 basis point (0.5%) rise in the interest rate will cause the fair value to decrease by ¥27,249 million ($328 million). This impact presumes that risk variables excluding interest rate are fixed, and does not consider the correlation between interest rate and other risk variables. In addition, there is a possibility that these calculated amount may underestimate the impact when interest rate changes beyond the range of reasonably expected fluctuations.

(c) Liquidity risk management related to fund procurement

To conduct proper risk management in these operations, long-term and stable funds such as fiscal loan funds, government-backed bonds, and FILP agency bonds are secured to finance this account and deposits are not accepted. Cash flows are assessed and overdraft facility accounts are established with multiple private sector financial institutions to maintain daily cash flows.

b. Agriculture, Forestry, Fisheries and Food Business Operations

The risk management structure for these operations is described below.

(a) Credit risk management

For these operations, credit risk is properly managed through (i) individual credit management, (ii) credit rating, (iii) asset self assessment, and (iv) quantification of credit risk.

(i) Individual credit management

The screening process for these operations includes screening of the probability of repayment based on eligibility for financing, validity of the financing conditions, and the future potential of the business. Particularly, screening for the certainty of repayment is conducted with a screening standard that gives sufficient consideration to the specific industry (agriculture, forestry, and fisheries) risks. This consists of close examination of the creditworthiness of the borrower, investment risk, investment effect, and comprehensive verification and confirmation of repayment ability that takes into account feasibility of the payment and repayment plan, and suitability of financing conditions.

Efforts are also made to continuously assess the customer’s economic condition, and maintain and improve the soundness of loan assets through active and detailed support activities.

(ii) Credit rating

These operations strive to maintain and improve the quality of loan assets by using ratings for early discovery of customers with business conditions that could be cause for concern in order to enact business support. Ratings are assigned based on a model built using internal data. The reliability of this scoring model is ensured through continual recalibration based on annual inspection of the accuracy of the model’s evaluation.

The credit ratings are also used for individual credit management, asset self assessment, and quantification of credit risk as the basis for credit risk management. For this reason reassessment of the credit ratings system is conducted as required.

(iii) Asset self assessment

For these operations standards have been established in accordance with the Financial Inspection Manual prepared by the Financial Services Agency to conduct self assessment.

In this process, first stage assessments are conducted by the branch offices, second stage assessments by the credit department, and internal inspections by the auditing department.

The results of this self assessment are used to appropriately estimate write-offs and allowances, and are used internally for the constant assessment of the credit conditions of the operations. They are also actively used for the disclosure of the quality of assets to enhance the transparency of the financial position of the operations.

(iv) Quantification of credit risk

To assess the overall risk of the portfolio, credit risks are quantified for internal management in these operations.

(b) Market risk management

The main type of market risk associated with this account is interest rate risk. It is JFC policy to minimize interest rate risk by matching the duration of assets and liabilities. However, due to characteristics such as long redemption periods and fixed interest rates that are required by agriculture, forestry, fisheries policy, duration gaps arise. Efforts are made to assess interest rate risk in these operations through methods such as maturity ladder analysis and duration analysis, and to conduct proper risk management by attempting to reduce interest rate risk through the provision of long-term financing.

These operations do not use quantitative analysis of interest rate risk for risk management purposes.

The primary financial instruments that are subject to interest rate risk in these operations include loans and bills discounted, borrowed money, bonds payable, and entrusted funds.

When all other risk variables are fixed, it is considered that a 50 basis point (0.5%) decline in the current interest rate as of March 31, 2011 will cause the fair value after netting of the financial assets and financial liabilities held in this account to increase by ¥7,829 million ($94 million). Conversely, it is considered that a 50 basis point (0.5%) rise in the interest rate will cause the fair value to decrease by ¥7,902 million ($95 million). This impact presumes that risk variables excluding interest rate are fixed, and does not consider the correlation between interest rate and other risk variables. In addition, there is a possibility that these calculated amount may underestimate the impact when interest rate changes beyond the range of reasonably expected fluctuations.

(c) Liquidity risk management related with fund procurement

Long-term and stable funds such as fiscal investment and loans and FILP agency bonds are secured to finance this account and deposits are not accepted.

Cash flows are assessed and proper measures including establishing overdraft facility accounts with multiple private sector financial institutions have been taken to maintain daily cash flows for proper risk management.

c. SME Loan Programs and Securitization Support Programs (Guarantee-type Operation)

The risk management structure for these operations is described below.

(a) Credit risk management

(i) Individual credit management

For financing operations, the financing decision is conducted upon assessment of the situation of company applying for funds from a fair and neutral position and verification of the certainty of repayment and validity of use of funds.

Since these financing operations specialize in long-term funding for businesses, in the screening process, verification assessment is made of the likelihood of long-term repayment focusing on business profits as well as on overall judgment being made on the certainty of repayment.

An overall judgment of the company’s enterprise power is made, not limited to a quantitative analysis focusing on the financial statements, but taking into consideration various management activities including the combination of people, money, and other factors that makes up the company and the future prospects of the company that has applied for funds.

We strive to continuously assess the situation after financing has been granted through review of financial reports and regular company visits. Based on the classification of the borrower or otherwise as required, and after consideration of the results of management improvement plans, follow ups will be conducted as required to determine the subsequent approach to the transaction.

In addition, in order to support the growth and development of the borrower, we will strive to give as much feedback as possible on the screening results and provide consultation support to help resolve management issues. In particular, we will support companies struggling to respond to changes in the business environment by formulating business improvement plans through methods such as preparing and submitting management improvement proposals.

(ii) Credit rating

A credit scoring model based on analysis of transaction data collected over the years for borrowers has been developed for these operations and has been used in the screening process. In Fiscal Year 2002 this tool was developed for credit rating, and a credit rating system based on a new scoring model was introduced in Fiscal Year 2007 to improve default determination accuracy. In this manner, credit risk is being adequately evaluated.

(iii) Asset self assessment

For these operations standards have been established in accordance with the Financial Inspection Manual prepared by the Financial Services Agency to conduct self assessment. Classification of borrowers is being conducted based on the new credit rating system introduced in Fiscal Year 2007.

First stage assessments of borrower classification and asset type are conducted by the front offices and second stage assessments by a separate credit department. An auditing department independent from the other sections then conducts an internal inspection to verify the accuracy of assessments.

(iv) Quantification of credit risk

In addition to the individual credit management described above, from 2005 we started monitoring and quantifying credit risks to assess the overall risk of the credit portfolio to further improve the efficiency of financing operations and the quantification and management of credit risk.

(v) Credit risk management for securitization support operations

In the securitization support operations since July, 2004, we have used scoring models such as our proprietary creditworthiness measurement tool which was developed based on the analysis of transaction data collected over the years for SMEs, and a Credit Risk Database (CRD) to conduct screening. In addition, statistical methods such as Monte Carlo simulations are used to accurately assess the overall credit risk for pools of claims to establish a proper guarantee rate based on credit risk.

After guarantees have been conducted, accurate assessment of credit risk is conducted through confirmation of the repayment status, submission of financial reports, and regular reassessment of the pool of claims.

(b) Market risk management

(i) Interest rate risk

The main type of market risk associated with these operations is interest rate risk. It is JFC policy to minimize interest rate risk by matching the cash flows between assets and liabilities. However, not all cash flows can be matched, so some gaps do arise between assets and liabilities. Efforts are made to assess interest rate risk in these operations through methods such as maturity ladder analysis and duration analysis, and conduct proper risk management by attempting to reduce interest rate risk by diversifying the year of issue for bonds.

(ii) Exchange rate risk

It is JFC policy to fully hedge through use of currency swaps, the exchange rate risk of issues of foreign-currency denominated debt securities. The counterparty risk associated with swaps is managed through regular assessment of the fair value and risk exposure of the swap transaction for counterparties, and the creditworthiness of counterparties.

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(iii) Quantitative information relating to market risk

These operations do not use quantitative analysis of interest rate risk for risk management purposes.

The primary financial instruments that are subject to interest rate risk, which is one of the main risk variables, are loans and bills discounted, borrowed money, and bonds payable.

When all other risk variables are fixed, it is considered that a 50 basis point (0.5%) decline in the current interest rate as of March 31, 2011 will cause the fair value after netting of the financial assets and financial liabilities held in this account to increase by ¥21,612 million ($260 million). Conversely, it is considered that a 50 basis point (0.5%) rise in the interest rate will cause the fair value to decrease by ¥19,865 million ($239 million). This impact presumes that risk variables excluding interest rate are fixed, and does not consider the correlation between interest rate and other risk variables. In addition, there is a possibility that these calculated amount may underestimate the impact when interest rate changes beyond the range of reasonably expected fluctuations.

(c) Liquidity risk management related to fund procurement

Long-term and stable funds such as fiscal loan funds, government-backed bonds, and FILP agency bonds are secured to finance this account and deposits are not accepted.

Cash flows are assessed and proper measures including establishing overdraft facility accounts with multiple private sector financial institutions, have been taken to maintain daily cash flows for proper risk management.

d. Securitization Support Programs (Purchase-type Operation)

The risk management structure for these operations is described below.

(a) Credit risk management

In the securitization support operations, we use scoring models such as our proprietary creditworthiness measurement tool developed based on analysis of transaction data collected over a number of years for SMEs, and a CRD (Credit Risk Database) to conduct screening. In addition, statistical methods such as Monte Carlo simulations are used to accurately assess the overall credit risk for pools of claims to establish a proper return based on credit risk.

(b) Market risk management

The main type of market risk associated with these operations is interest rate risk.

It is JFC policy to minimize interest rate risk by matching the cash flows between assets and liabilities, and we consider that interest rate risk is limited.

These operations do not use quantitative analysis of interest rate risk for risk management purposes.

The primary financial instrument that is subject to interest rate risk in these operations is securities.

When all other risk variables are fixed, it is considered that a 50 basis point (0.5%) decline in the current interest rate as of March 31, 2011 will cause the market value after netting of the financial assets and financial liabilities held in this account to increase by ¥689 million ($8 million). Conversely, it is considered that a 50 basis point (0.5%) rise in the interest rate will cause this value to decrease by ¥674 million ($8 million). This impact presumes that risk variables excluding interest rate are fixed, and does not consider the correlation between interest rate and other risk variables. In addition, there is a possibility that these calculated amount may underestimate the impact when interest rate changes beyond the range of reasonably expected fluctuations.

(c) Liquidity risk management related with fund procurement

It is considered that liquidity risk is limited because a system has been adopted to minimize liquidity risk and sufficient funding support can be expected from the government.

e. Credit Insurance Programs

The risk management structure for these operations is described below.

(a) Market risk management

The main type of market risk associated with these operations is interest rate risk.

These operations strive to undertake appropriate risk management practices by managing funds procured from government investments through using highly stable instruments such as Japanese government bonds.

The main financial instruments exposed to interest rate risk in these operations are due from banks and securities. These financial instruments do not have material sensitivity to interest rate fluctuations because they are funds raised from government investments primarily managed using short-term maturities.

(b) Liquidity risk management related to fund procurement

        Financing is provided from government funds. Efforts are made for proper risk management through the assessment of cash flows.

f. JBIC Operations

The risk management structure for these operations is described below.

(a) Credit risk management

The basis of credit risk management is centered on individual credit management based on the creditworthiness of the borrower during the credit approval process.

When a new credit application is processed, the relevant finance departments (sales promotion department) and credit departments collect and analyze information on the borrower. The overseas representative offices also play a part in collecting information on foreign governments and corporations. Credit appraisal takes place based on the information that has been gathered and analyzed, with the different departments ensuring appropriate check throughout the process, leading to the final decision by the management.

For lending to foreign governments and corporations, JFC makes most use of its position as a public institution and exchanges views and information with governments and other authorities in recipient countries, international institutions such as the IMF and the World Bank, other regional development banks and official export credit agencies as well as private financial institutions in the industrial countries. Using all these channels, JFC evaluates sovereign or country risk (risk in addition to corporate risk and project risk associated with the country in which the corporation is located) based on a broad range of information on government and government agency borrowers as well as political and economic conditions in their countries.

The relevant finance departments and credit departments conduct proper credit risk management based on the credit risk rating system for segmented risk categories and the asset self assessment system based on the Financial Inspection Manual. In addition, an Integrated Risk Management Committee is held regularly to report the status of credit management to the management. The credit management situation is also checked by an independent auditing department.

In addition, a claims protection mechanism exists based on an international framework unique to official creditors, that is not contained in private sector financial institutions, for official claims on foreign governments. This mechanism consists of international financial assistance upon international approval by the Paris Club, an international group focusing on debt, to allow the debtor country to continue debt repayment when the debtor country becomes temporarily unable to service its debt due to economic conditions. As part of this international financial assistance, the debtor country conducts an economic reform program upon agreement with the IMF in order to secure the ability to sustainably service its debt. In view of JFC’s position as a public financial institution, it will use the framework of the Paris Club to preserve its official claims on foreign governments.

Besides the individual credit management outlined above, credit risks are quantified to assess the overall risk of the portfolio in these operations. To quantify credit risks, it is important to take into account the characteristic of the loan portfolio, namely, that there are a significant proportion of long-term loans and loans involving sovereign risk or country risk. Also to be taken into account is the mechanism of securing assets, such as the framework of international financial assistance to debtor countries through the Paris Club, which is unique to official creditors. This account uses a unique model to quantify the credit risk taking account of the above explained elements and measures amount of credit risk, which are utilized for credit risk management.

(b) Market risk management

ALM is used to manage exchange rate risk and interest rate risk for these operations. Market risk management protocols contain detailed stipulations of risk management methods and procedures, which are used by the ALM Committee to assess and confirm the execution of ALM, and for discussions concerning future responses. In addition, monitoring is conducted through gap analysis and interest rate sensitivity analysis as well as Value at Risk (“VaR”) to comprehensively assess the interest and terms of financial assets and liabilities. The results are regularly reported to the ALM Committee.

The basic policy for managing exchange rate risk and interest rate risk in these operations is described below.

(i) Exchange rate risk

Foreign currency-denominated loans conducted in these operations involve risks related to exchange rate fluctuations. We have a consistent policy of managing this risk by fully hedging this risk exposure through the use of currency swaps and forward foreign exchange transactions.

(ii) Interest rate risk

Interest rate risk arises from exposure to market interest rate fluctuations for yen-denominated loan and foreign currency-denominated loan operations and the policy for managing interest rate risk is described below.

 Yen-denominated loan operations

For the most part, funding for yen-denominated loans is managed at fixed-rate interest. Currently, interest rate risk for yen-denominated loans is limited since the maturity of loans and the related funding arrangements are generally matched. In addition, swaps are used to hedge interest rate risk for portions of loans that are thought to have high exposures to interest rate fluctuation risk.

‚ Foreign currency-denominated loan operations

For foreign currency-denominated loan operations, interest rate risk is hedged through the application of a consistent policy of using interest rate swaps and managing funds with floating interest rates for both loans and related funding arrangements.

(iii) Status of market risk

These operations only maintain a banking account and do not have financial instruments in a trading account. While these operations are managed by hedging operation in principle, as already stated previously, market risk is measured in order to assess fair value and potential risks. The following represents an overview of VaR in the current fiscal year.

(a) VaR (Fiscal year ended March 31, 2011)

(1) Interest rate VaR: 69.7 billion of yen ($1 billion)

(2) Exchange rate VaR: 45.9 billion of yen ($1 billion)

(b) VaR measurement model

(1) Interest rate VaR: Historical model

(2) Exchange rate VaR: Variance-covariance model

Quantitative standards:  Confidence Interval: 99%; ‚ Holding period: 1 year; ƒ Observation period: 5 years

(c) Risk management using VaR

VaR is a market risk measure that assesses the maximum possible profits or losses that could be incurred based on historical market movements of interest rates or exchange rates, etc over a specific period in the past (or observation period) within a certain period of time (or holding period) under a certain probability (or confidence interval), that is derived statistically by employing the theory of possibility distribution.

This measurement assumes actual market trends and the theory of probability distribution. Based on the possibility that future market trends could deviate from these assumptions, a back-test is performed to cross-check the model-measured interest rate VaR with actual profits or losses, in order to confirm the effectiveness of market risk measurements using VaR. In addition, a stress test, which goes beyond the probability distribution of historical market movements is conducted in order to capture risks from multifaceted perspectives.

The following points should generally be noted for VaR model measurement.

• VaR will differ depending on the confidence interval, holding period or observation period.

• VaR indicates the maximum amount of unrealized profits or losses at the time of measurement. However, calculated VaR may not always be realized in the future with the certain probability because the assumptions, such as market movements, could vary during holding period.

• VaR indicates the maximum value based on specific assumption. As such, it is imperative to keep in mind that VaR may underestimate the potential losses when utilizing VaR as a risk management measure.

(c) Liquidity risk management related to fund procurement

Long-term and stable funds such as fiscal loan funds, government-backed bonds, and FILP agency bonds are used to finance these operations and deposits are not accepted.

Cash flows are assessed and proper measures including establishing overdraft facility accounts with multiple private sector financial institutions are taken to maintain daily cash flows for proper risk management.

(d) Derivatives transactions

A protocol of internal checks with separate divisions executing transactions, assessing the effectiveness of hedges, and conducting office management has been established for derivatives transactions, and these transactions are conducted according to derivatives-related regulations.

g. Financial Operations for Facilitating Realignment of United States Forces in Japan

The risk management structure for these operations is described below.

(a) Market risk management

The main type of market risk associated with these operations is interest rate risk.

The operations strive to undertake appropriate risk management by managing funds raised through grants from the government using through current deposits.

In addition, there is no material sensitivity to interest rate fluctuations for this financial instrument since funds are managed using current deposits.

(b) Liquidity risk management related to fund procurement

These operations are financed using government grants only. In addition, JFC strives to undertake appropriate risk management by ascertaining the status of the cash position of these operations.

h. Operations to Facilitate Crisis Responses

The risk management structure for these operations is described below.

(a) Credit risk management

For these operations standards have been established in accordance with the Financial Inspection Manual prepared by the Financial Services Agency to conduct asset self assessment. In the asset self assessment, an inspection is conducted by the auditing department.

(b) Market risk management

The primary financial instruments that are subject to interest rate risk, which is one of the main risk variables in these operations include loans and borrowings.

These operations provide loans to designated financial institutions and are funded through borrowings from fiscal investment and loans. Since the terms and conditions of lendings and borrowings are equal, cash inflows resulting from lendings and cash outflows resulting from borrowings are matched. Therefore, as a whole operations, interest rate risk does not exist as a market risk.

(c) Liquidity risk management related to fund procurement

Long-term and stable funds, such as fiscal investment and loans are secured to finance this account and deposits are not accepted. In addition, the loan period and borrowing period are equal. Sufficient short-term liquidity is secured for compensation payment funds towards designated financial institutions, and liquidity risk is considered to be limited. In addition, continual efforts are being made to make financing plans more sophisticated and minimize liquidity risk.

i. Operations to Facilitate Specific Businesses Promotion

The risk management structure for these operations is described below.

(a) Credit risk management

For these operations standards have been established in accordance with the Financial Inspection Manual prepared by the Financial Services Agency to conduct asset self assessment. In the asset self assessment, an inspection is conducted by the auditing department.

(b) Market risk management

The primary financial instruments that are subject to interest rate risk, which is one of the main risk variables in these operations include loans and bills discounted and borrowed money.

These operations provide loans to designated financial institutions and are funded through borrowings from fiscal investment and loans. Since the terms and conditions of lendings and borrowings are equal, cash inflows resulting from lendings and cash outflows resulting from borrowings are matched. Therefore, as a whole operations, interest rate risk does not exist as a market risk.

(c) Liquidity risk management related to fund procurement

Long-term stable funds, such as fiscal investment and loans are used to finance this account and deposits are not accepted. Liquidity risk is believed to be limited because the loan period and borrowing period are equal.

(4) Supplementary explanation concerning fair value of financial instruments

The fair value of financial instruments includes amounts based on market value and amounts that have been reasonably estimated when no market value is available. Set valuation inputs are used for the calculation of this amount, and if different valuation inputs are used the resulting amount could vary.

2. Fair value of financial instruments

The amount in the balance sheet at March 31, 2011, and the related fair value, and difference is as follows. Note that unlisted securities whose fair value is extremely difficult to be determined are not included in the following chart (refer to Note 3).

(Unit: In millions of yen)

	Amount on Balance Sheet			Fair value			Difference
(1) Cash and due from banks	¥	3,354,455		¥	3,354,721		¥	266
(2) Securities
Held to maturity debt securities		1,071,356			1,072,551			1,194
Available-for-sale securities		3,800			3,800			—
(3) Loans and bills discounted		28,962,571
Allowance for loan losses (*1)		(465,749	)
		28,496,822			29,070,391			573,569
Total assets		32,926,434			33,501,465			575,030
(1) Borrowings (2) Bonds payable		21,904,897 5,670,825			22,214,596 5,787,285			309,699 116,460
Total liabilities		27,575,722			28,001,882			426,159
Derivative transactions (*2) Derivative transactions not qualifying for hedge accounting Derivative transactions qualifying for hedge accounting		(4 965,093	)		(4 965,093	)		—   —
Total derivative transactions	¥	965,089		¥	965,089		¥	—
		(Unit: In millions of U.S. dollars)
	Amount on Balance Sheet			Fair value			Difference
(1) Cash and due from banks	$	40,342		$	40,346		$	4
(2) Securities
Held to maturity debt securities		12,885			12,899			14
Available-for-sale securities		45			45			—
(3) Loans and bills discounted		348,317
Allowance for loan losses (*1)		(5,601	)
		342,716			349,614			6,898
Total assets		395,988			402,904			6,916
(1) Borrowings (2) Bonds payable		263,438 68,200			267,163 69,600			3,725 1,400
Total liabilities		331,638			336,763			5,125
Derivative transactions (*2) Derivative transactions not qualifying for hedge accounting Derivative transactions qualifying for hedge accounting		0 11,607			0 11,607			—   —
Total derivative transactions	$	11,607		$	11,607		$	—

(*1) General allowance for loan losses, specific allowance for loan losses, and the allowance for possible loan losses on specific overseas loans have been deducted from loans.

(*2) Derivatives recorded in “other assets and other liabilities” are collectively displayed.

The net values of assets and liabilities arising from derivative transactions are displayed. The figures in parenthesis indicate net liabilities.

(Note 1)  Valuation methodologies used for estimating fair values for financial instruments

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Assets

(1) Cash and due from banks

For Due from banks that do not mature or have a maturity under 3 months, the carrying amount is used as fair value because fair value resembles the carrying amount approximates to the fair value. For due from banks that have a maturity over 3 months, fair value is based on the present value calculated by discounting future cash flow by the risk free rate (the standard Japanese government bond rate) based on the appropriate deposit term.

(2) Securities

Market value is used for securities. However for corporate bonds in the Account for SME Loan Programs and the Account for Securitization Support Programs (Guarantee-type Operation), the Account for Credit Insurance Programs, and the Account for Operations to Facilitate Crisis Response, the carrying amount is used as fair value because fair value approximates the carrying amount. The fair value of “Available-for-sale securities” is based on the price that is indicated from other financial institution.

Notes for securities by purpose of holding are found in Note 17 “Market Value of Securities”.

(3) Loans and bills discounted

Loans, including loans with variable interest rates and loans with fixed interest rates, are calculated as follows.

a. Account for Micro Business and Individual Operations

All loans have a fixed interest rate and fair value is calculated by discounting the principal and interest by the interest rate assumed to be used if a new loan were conducted based on the type and period of loan. However, the fair value mentioned above does not include allowance for loan losses which was additionally provided for the borrowers whose condition is not reflected on self-assessment as of the base date. (Please see “Significant accounting policies (f)”).

For claims that are not performed or could default, allowance for loan losses is provided based on the expected collectable amount from the collateral or guarantee. Fair value approximates the amount on the balance sheet on the closing date net of the allowance for loan losses, and, therefore, this amount is used for fair value.

b. Account for Agriculture, Forestry, Fisheries and Food Business Operations

All loans have a fixed interest rate and fair value is calculated by discounting the risk-reflected principal and interest that incorporates risk by the risk free rate (the standard Japanese government bond rate) based on the type of borrower and period of loan.

c. Account for SME Loan Programs and Securitization Support Programs (Guarantee-type Operation)

All loans, with the exception of subordinated capital loans, have a fixed interest rate and fair value is calculated for all loans other than Bankrupt loans and Substantially bankrupt loans by discounting the risk-adjusted principal and interest by type of borrower using the risk free rate (the standard Japanese government bond rate). However, the fair value mentioned above does not include allowance for loan losses which was additionally provided for the borrowers whose condition could not be determined through self-assessment as of the base date. (See “Significant accounting policies (f)”).

For obligations on bankrupt borrowers or substantially bankrupt borrowers, allowance for loan losses is provided based on the expected collectable amount from the collateral or guarantee. Fair value resembles the amount on the balance sheet on the closing date net of the allowance for loan losses, and therefore, this amount is used for fair value.

d. Account for Securitization Support Programs (Purchase-type Operation)

Not applicable

e. Account for Credit Insurance Programs

Not applicable

f. Account for JBIC Operations

For loans with variable interest rates an amount calculated by the floating rate note method to reflect market interest rates over the short term is used for fair value.

For loans with fixed interest, the total principal and interest is discounted by a risk free rate that incorporates the default ratio and coverage ratio to calculate fair value. However for obligations on bankrupt borrowers, substantially bankrupt borrowers, and potentially bankrupt borrowers a provision for bad debt is calculated based on the expected collectable amount from the collateral or guarantee. Fair value approximates the amount on the balance sheet on the closing date after a deduction has been made for the provision for bad debt, so this amount is used for fair value.

g. Financial Account Related to the Financial Operations for Facilitating Realignment of United States Forces in Japan

Not applicable

h. Account for Operations to Facilitate Crisis Responses

All loans have a fixed interest rate and fair value is calculated by discounting the principal and interest by the interest rate estimated from the market yield of bonds issued by the borrower based on the type of borrower and period of loan.

i. Account for Operations to Facilitate Specific Businesses Promotion

All loans have a fixed interest rate and fair value is calculated by discounting the principal and interest by type of borrower and period of loan using the interest rate estimated from the market yield of bonds issued by the borrower.

Liabilities

(1) Borrowings

Borrowings with variable interest rates indicate that short-term market interest rates and the credit conditions of JFC are not significantly altered by borrowings. Therefore, the carrying amount is used as fair value because it is considered that the carrying amount approximates the fair value. For borrowings with a fixed interest rate, in principle, fair value is calculated by discounting the principal and interest of the borrowings by the risk free rate (the standard Japanese government bond rate) based on the set period of loan.

(2) Bonds payable

Market value is used for fair value of bonds. However, bonds that are subject to hedging with forward contracts are treated as yen-denominated bonds with fixed interest, and the fair value is calculated by discounting the principal and interest of the borrowings by the risk free rate (the standard Japanese government bond rate).

Derivative transactions

Derivative transactions are discussed under Note 18 “Derivative transactions”.

(Note 2) For credit insurance underwriting, the credit decision is conducted by a specified financial institution, and JFC does not participate in the credit decision for the individual subject to compensation at the time of loan, and therefore JFC does not retain the financial data of the individuals subject to compensation. Accordingly, it is recognized that fair value is extremely difficult to be determined.

The amount of compensation underwritten for compensation security contract is as follows.

Balance of compensation underwritten: ¥1,869,023 million ($22,478 million).

Compensation loss reserve: ¥59,757 million ($719 million).

(Note 3) Financial instruments that are recognized to be extremely difficult to be determined fair value are as follows.

They are not included in “Assets, (2) Securities” “Assets, (3) Loans and Bill Discounted” or “Liabilities, (1) Borrowings”

	(In millions of yen)		(In millions of U.S. dollars)
Classification	Carrying amount on balance sheet		Carrying amount on balance sheet
1) Unlisted stocks (*1)	¥	21,937	$	264
2) Corporate bonds (specified asset-backed securities) (*2)		754		9
3) Other securities (trust beneficiary securities) (*2)		2,659		32
4) Partnership investments (*3)		52,746		634
5) Loans on deeds (subordinated capital loans) (*4)		46,659		561
6) Borrowings from general account of the national budget (*5)		131,300		1,579
7) Borrowings from the FILP special account (investment account) of the national budget (*6)		706		9
Total	¥	256,763	$	3,088

(*1) Since unlisted stocks do not have quoted market prices available and fair value is extremely difficult to be determined, fair values are not stated.

(*2) Corporate bonds (specified asset-backed securities) and other securities (trust beneficiary securities) do not have a market value.

These are securities issues backed by loan claims on SMEs originating from multiple financial institutions. The following steps are followed when constructing the subordination structure for the securities:

(1) First, groups of loan claims from the financial institutions are put into sub-pools, and the most subordinated section is removed;

(2) The remainder of the sub-pool besides the most subordinated section is treated as an amalgamate and divided into levels of senior and subordinate.

For this reason, to evaluate the fair value of corporate bonds (specified asset-backed securities) and other securities (trust beneficiary securities) owned by JFC that have been amalgamated , the individual financial data for the borrowers that back the securities issue is required. Because JFC is not structured to continuously acquire this data, fair value is extremely difficult to be determined and is not stated.

(*3) For partnership investments composed of unlisted stocks that do not have quoted market prices available and for which fair value is extremely difficult to be determined, fair values are not stated.

(*4) For loans on deed (subordinated capital loans) under the Provision Scheme for Challenge Support and Capital Enhancement, fair values are not stated because it is recognized that fair value is extremely difficult to be determined. This is because future cash flows cannot reasonably be estimated due to its particular scheme that applicable interest rates are annually determined by business performance of the debtor, instead of being determined at the time of loan executions.

(*5) For borrowings from general account of the national budget, fair values are not stated because it is recognized that fair value is extremely difficult to be determined because no redemption period is stipulated and it is not possible to reasonably estimate future cash flows.

(*6) For borrowings from the FILP special account (investment account) of the national budget, fair values are not stated because it is recognized that fair value is extremely difficult to be determined for the following reason: an interest rate is not set at the time of borrowing, as this type of borrowing consists of a scheme in which a lump interest payment is made after the final installment payment redemption and it is not possible to reasonably estimate future cash flows.

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(Note 4) Redemption schedule for receivables and redeemable securities with future redemption dates

	(In millions of yen)
	Maturities within one year		Maturities after one year but within three years		Maturities after three years but within five years		Maturities after five years but within seven years		Maturities after seven years but within ten years		Maturities after ten years
Due from banks (*1)		3,104,257		250,000		—		—		—		—
Securities (*2)
Held-to-maturity debt securities		1,050,359		34		—		20,983		—		—
Available-for-sale securities		—		1,192		2,607		—		—		—
Loans and bills discounted (*2)		4,688,213		8,712,268		7,228,091		3,206,243		2,412,584		2,333,840
Total		8,842,830		8,963,494		7,230,699		3,227,226		2,412,584		2,333,840
	(In millions of U.S. dollars)
	Maturities within one year		Maturities after one year but within three years		Maturities after three years but within five years		Maturities after five years but within seven years		Maturities after seven years but within ten years		Maturities after ten years
Due from banks (*1)		37,333		3,007		—		—		—		—
Securities (*2)
Held-to-maturity debt securities		12,632		0		—		252		—		—
Available-for-sale Securities		—		14		32		—		—		—
Loans and bills discounted (*2)		56,383		104,778		86,928		38,560		29,015		28,068
Total		106,348		107,799		86,960		38,812		29,015		28,068

(*1) Demand deposits contained within due from banks are stated as “Maturities within one year”.

(*2) Within loans and securities, claims against bankrupt borrowers, substantially bankrupt borrowers, and potentially bankrupt borrowers contains an amount of ¥327,573 million ($3,940 million) that is not expected to be redeemed and not included in the table above. In addition, in the Account for Micro Business and Individual Operations, there are claims of ¥100,416 million ($1,208 million) that have redemption problems or could default, and are not expected to be redeemed. This amount is not included in the table, either.

(Note 5) Redemption schedule for bonds and borrowings with future redemption dates

	(In millions of yen)
	Maturities within one year		Maturities after one year but within three years		Maturities after three years but within five years		Maturities after five years but within seven years		Maturities after seven years but within ten years		Maturities after ten years
Borrowings (*)		3,633,023		7,242,880		6,580,623		2,316,247		1,336,543		796,284
Bonds payable		1,121,097		2,321,772		1,470,187		466,000		190,000		105,000
Total		4,754,121		9,564,653		8,050,811		2,782,247		1,526,543		901,284
	(In millions of U.S. dollars)
	Maturities within one year		Maturities after one year but within three years		Maturities after three years but within five years		Maturities after five years but within seven years		Maturities after seven years but within ten years		Maturities after ten years
Borrowings (*)		43,692		87,106		79,142		27,856		16,074		9,576
Bonds payable		13,483		27,923		17,681		5,605		2,285		1,263
Total		57,175		115,029		96,823		33,461		18,359		10,839

(*) In borrowings, ¥131,300 million ($1,579 million) of general accounting investments with no redemption period stipulated are not included.

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17. Market Value of Securities

The market value of securities at March 31, 2010 is as follows:

(a) Trading securities

Not applicable

(b) Held-to-maturity debt securities with market value

	Type	Carrying amount on balance sheet (In millions of yen)		Fair value (In millions of yen)		Difference (In millions of yen)
Securities whose fair value exceeds their carrying amount	Japanese government bonds		21,134		22,120		986
	Corporate bonds		—		—		—
	Others		—		—		—
	Subtotal		21,134		22,120		986
Securities whose fair value does not exceed their carrying amount	Japanese government bonds		—		—		—
	Corporate bonds		3,979		3,979		—
	Others		—		—		—
	Subtotal		3,979		3,979		—
Total			25,113		26,100		986

(c) Equity securities of or investment in subsidiaries and affiliates (as of March 31, 2010)

(Note) These are equity securities of or investment in subsidiaries and affiliates whose fair value is extremely difficult to be determined.

	(In millions of yen)
	Carrying amount on balance sheet
Equity Securities of, or investment in affiliates		26,887
Total		26,887

They have no quoted market price available and their fair value is extremely difficult to be determined.

(d) Available-for-sale securities (as of March 31, 2010)

	Type	Carrying amount on balance sheet (In millions of yen)		Acquisition cost (In  millions of yen)		Difference (In millions  of yen)
Securities whose carrying amount exceeds their acquisition cost	Stocks		—		—		—
	Debt securities		—		—		—
	Japanese government bonds		—		—		—
	Corporate bonds		—		—		—
	Others		—		—		—
	Subtotal		—		—		—
Securities whose carrying amount does not exceed their acquisition cost	Stocks		—		—		—
	Debt securities		—		—		—
	Japanese government bonds		—		—		—
	Corporate bonds		—		—		—
	Others		226,580		226,580		—
	Subtotal		226,580		226,580		—
Total			226,580		226,580		—

(Note) Available-for-sale securities whose fair value is extremely difficult to be determined

`	(In millions of yen)
	Carrying amount on balance sheet
Debt securities
Corporate bonds		2,131
Others
Unlisted foreign stocks		15,688
Unlisted Japanese securities		3,467
Unlisted foreign securities		3,508
Total		24,796

These are not included in the above table of “Available-for-sale securities” because there are no quoted market prices available and it is extremely difficult to determine the fair value of these securities.

(e) Held-to-maturity debt securities sold during the fiscal year ended March 31, 2010

Not applicable

(f) Available-for-sale securities sold during the fiscal year ended March 31, 2010

Not applicable

(g) Change in classification of securities

Not applicable

(h) Impairment of securities

Not applicable

(i) Money held in trust

Not applicable

(j) Net unrealized gains (losses) on available-for-sale securities are as follows:

Valuation Difference	(In millions of yen)
Valuation difference	¥	(687	)
Available-for-sale securities		(687	)
Other money held in trust		—
Valuation Difference for Available-for-sale securities		(687	)

- 36 -

The market value of securities at March 31, 2011 is as follows:

(a) Trading securities

Not applicable

(b) Held-to-maturity debt securities with market value

	Type	Carrying amount on balance sheet (In millions of yen)		Fair value (In millions of yen)		Difference (In millions of yen)		Carrying amount on balance sheet (In millions of dollars)		Fair value (In millions of dollars)		Difference (In millions of dollars)
Securities whose fair value exceeds their carrying amount	Japanese government bonds		21,112		22,307		1,194		254		268		14
	Corporate bonds		—		—		—		—		—		—
	Others		—		—		—		—		—		—
	Subtotal		21,112		22,307		1,194		254		268		14
Securities whose fair value does not exceed their carrying amount	Japanese government bonds		1,049,949		1,049,949		—		12,627		12,627		—
	Corporate bonds		294		294		—		4		4		—
	Others		—		—		—		—		—		—
	Subtotal		1,050,244		1,050,244		—		12,631		12,631		—
Total			1,071,356		1,072,551		1,194		12,885		12,899		14

(c) Equity securities of or investment in subsidiaries and affiliates (as of March 31, 2011)

(Note) These are equity securities of, or investment in, subsidiaries and affiliates whose fair value is extremely difficult to be determined.

	(In millions of yen)		(In millions of U.S. dollars)
	Carrying amount on balance sheet		Carrying amount on balance sheet
Equity Securities of, or investment in affiliates		54,223		652
Total		54,223		652

They have no quoted market price available and their fair value is extremely difficult to be determined.

(d) Available-for-sale securities (as of March 31, 2011)

	Type	Carrying amount on balance sheet (In millions of yen)		Acquisition cost (In  millions of yen)		Difference (In millions of  yen)		Carrying amount on balance sheet (In millions of dollars)		Acquisition cost (In  millions of dollars)		Difference (In millions of  dollars)
Securities whose carrying amount exceeds their acquisition cost	Stocks		—		—		—		—		—		—
	Debt securities		—		—		—		—		—		—
	Japanese government bonds		—		—		—		—		—		—
	Corporate bonds		—		—		—		—		—		—
	Others		—		—		—		—		—		—
	Subtotal		—		—		—		—		—		—
Securities whose carrying amount does not exceed their acquisition cost	Stocks		—		—		—		—		—		—
	Debt securities		—		—		—		—		—		—
	Japanese government bonds		—		—		—		—		—		—
	Corporate bonds		—		—		—		—		—		—
	Others		583,400		583,400		—		7,016		7,016		—
	Subtotal		583,400		583,400		—		7,016		7,016		—
Total			583,400		583,400		—		7,016		7,016		—

(Note) Available-for-sale securities whose fair value is extremely difficult to be determined.

`	(In millions of yen)		(In millions of U.S. dollars)
	Carrying amount on balance sheet		Carrying amount on balance sheet
Debt securities
Corporate bonds		754		8
Others
Unlisted foreign stocks		15,095		182
Unlisted Japanese securities		2,884		35
Unlisted foreign securities		5,139		62
Total		23,874		287

These are not included in the above table of “Available-for-sale securities” because there are no quoted market prices available and it is extremely difficult to determine the fair value of these securities.

(e) Held-to-maturity debt securities sold during the fiscal year ended March 31, 2011

Not applicable

(f) Available-for-sale securities sold during the fiscal year ended March 31, 2011

Not applicable

(g) Change in classification of securities

Not applicable

(h) Impairment of securities

Not applicable

(i) Money held in trust

Not applicable

(j) Net unrealized gains (losses) on available-for-sale securities are as follows:

Valuation Difference	(In millions of yen)			(In millions of U.S. dollars)
Valuation difference	¥	(1,665	)	$	(20	)
Available-for-sale securities		(1,665	)		(20	)
Other money held in trust		—			—
Valuation Difference for Available-for-sale securities		(1,665	)		(20	)

- 37 -

18. Derivatives transactions

Notes to derivative transactions in the fiscal year ended March 31, 2010 are as follows:

1. Derivatives transactions not qualifying for hedge accounting

(a) Interest rate-related transactions

Not applicable

(b) Currency-related transactions

Not applicable

(c) Equity-related transactions

Not applicable

(d) Bond-related transactions

Not applicable

(e) Commodity-related transactions

Not applicable

(f) Credit Derivatives transactions

Not applicable

2. Derivatives transactions qualifying for hedge accounting

Contract value does not equate to the market risk of the derivative transactions.

(a) Interest rate-related transactions (as of March 31, 2010)

	(In millions of yen)
Hedge accounting method	Type	Major hedged items	Contract value		Contract value (Maturing after one year)		Fair value
Basic accounting method	Interest rate swap Receive/fixed and pay/floating Receive/floating and pay/fixed Receive/floating and pay/floating	Long-term loans and bills discounted Long-term borrowings Corporate bonds	¥	2,103,196 574,558 238,056	¥	1,837,975 573,304 219,449	¥	76,149 (36,377 (744	)  )
	Total		¥	—	¥	—	¥	39,027

(Note 1) Calculation of fair value is based on the discounted cash flows.

(b) Currency-related transactions (as of March 31, 2010)

	(In millions of yen)
Hedge accounting method	Type	Major hedged items	Contract value		Contract value (Maturing after one year)		Fair value
Basic accounting method	Currency swap	Long-term loans and bills discounted Long-term borrowings Corporate bonds	¥	3,690,400	¥	3,361,330	¥	652,403
	Forward foreign exchange contracts	Long-term loans
	Sell			32		—		(0	)
	Buy			199		—		(5	)
	Total		¥	—	¥	—	¥	652,396

(Note)	1.	These are mainly accounted for using the deferred method of hedge accounting under “Accounting and Auditing Treatment Relating to Adoption of Accounting Standard for Foreign Currency Transactions for Banks” (JICPA Industry Audit Committee Report No. 25).
	2.	Calculation of fair value is based on the discounted cash flows.

(c) Equity-related transactions

     Not applicable

(d) Bond-related transactions

     Not applicable

Notes to derivative transactions in the fiscal year ended March 31, 2011 are as follows:

1. Derivatives transactions not qualifying for hedge accounting

Contract value does not equate to the market risk of the derivative transactions

(a) Interest rate-related transactions

	(In millions of yen)
	Type	Contract value		Contract value (Maturing after one year)		Fair value			Unrealized Gain/Loss
Over-the-Counter	Interest rate swap Receive/floating and pay/fixed	¥	486	¥	486	¥	(4	)	¥	3
	Total	¥	—	¥	—	¥	(4	)	¥	3
	(In millions of U.S. dollars)
	Type	Contract value		Contract value (Maturing after one year)		Fair value			Unrealized Gain/Loss
	Interest rate swap Receive/floating and pay/fixed	$	6	$	6	$	(0	)	$	0
	Total	$	—	$	—	$	(0	)	$	0

(Note 1)	Derivative instruments are revalued to fair value. Changes in fair value are included in the statement of operations.
(Note 2)	Calculation of fair value is based on the discounted cash flows.

(b) Currency-related transactions

Not applicable

(c) Equity-related transactions

Not applicable

(d) Bond-related transactions

Not applicable

(e) Commodity-related transactions

Not applicable

(f) Credit Derivatives transactions

Not applicable

2. Derivatives transactions qualifying for hedge accounting

Contract value does not equate to the market risk of the derivative transactions.

(a) Interest rate-related transactions (as of March 31, 2011)

	(In millions of yen)
Hedge accounting method	Type	Major hedged items	Contract value		Contract value (Maturing after one year)		Fair value
Basic accounting method	Interest rate swap Receive/fixed and pay/floating Receive/floating and pay/fixed Receive/floating and pay/floating	Long-term loans and bills discounted Long-term borrowings Corporate bonds	¥	2,167,260 533,341 166,514	¥	1,686,148 530,316 166,514	¥	62,200 (31,723 (201	)  )
	Total		¥	—	¥	—	¥	30,275
	(millions of U.S. dollars)
Hedge accounting method	Type	Major hedged items	Contract value		Contract value (Maturing after one year)		Fair value
Basic accounting method	Interest rate swap Receive/fixed and pay/floating Receive/floating and pay/fixed Receive/floating and pay/floating	Long-term loans and bills discounted Long-term borrowings Corporate bonds	$	26,064 6,414 2,003	$	20,278 6,378 2,003	$	748 (382 (2	)  )
	Total		$	—	$	—	$	364

(Note 1) Calculation of fair value is based on the discounted cash flows.

(b) Currency-related transactions (as of March 31, 2011)

	(millions of yen)
Hedge accounting method	Type	Major hedged items	Contract value		Contract value (Maturing after one year)		Fair value
Basic accounting method	Currency swap	Long-term loans and bills discounted Long-term borrowings Corporate bonds	¥	3,600,529	¥	3,313,462	¥	934,816
	Forward foreign exchange contracts	Long-term loans
	Sell			291		—		(6	)
	Buy			219		—		8
	Total		¥	—	¥	—	¥	934,818
	(millions of U.S. dollars)
Hedge accounting method	Type	Major hedged items	Contract value		Contract value (Maturing after one year)		Fair value
Basic accounting method	Currency swap	Long-term loans and bills discounted Long-term borrowings Corporate bonds	$	43,302	$	39,849	$	11,243
	Forward foreign exchange contracts	Long-term loans
	Sell			3		—		(0	)
	Buy			3		—		0
	Total		$	—	$	—	$	11,243

(Note)	1.	These are mainly accounted for using the deferred method of hedge accounting under “Accounting and Auditing Treatment Relating to Adoption of Accounting Standard for Foreign Currency Transactions for Banks” (JICPA Industry Audit Commitee Report No.25).
	2.	Calculation of fair value is based on the discounted cash flows.

(c) Equity-related transactions

     Not applicable

(d) Bond-related transactions

     Not applicable

- 38 -

19. Segment Information

Current Fiscal Year (April 1, 2010 to March 31, 2011)

(1) Segment Summary

The reportable segments of JFC are components for which discrete financial information is available and whose operating results are regularly reviewed by CEO and Board of Directors to assess performance.

JFC’s purpose is to contribute to the sound development of Japan and the international economy and society and to the improvement of the quality of national life, by taking responsibility for (i) the financial function to provide fund procurement assistance to the general public, small and medium enterprises and those engaged in agriculture, forestry and fishery and (ii) the financial function to promote overseas development and secure resources which are important for Japan and to maintain and improve the international competitiveness of Japanese industries and to promote the overseas business having the purpose of preserving the global environment, such as preventing global warming, also providing (iii) the financial services which are necessary to take appropriate measures with respect to disruptions to domestic or international financial order or damages caused by large-scale natural disasters, acts of terrorism, medical epidemics, etc., and furthermore enabling financial institutions, such as banks, to provide such necessary financial services in a timely and smooth manner, while having the objective of supplementing the financial transactions implemented by private financial institutions.

Based on the Act on Special Measures Concerning Smooth Implementation of Realignment of United States Forces in Japan, JFC is authorized to provide loans to necessary projects for promoting the realignment of United States Forces in Japan.

In addition, based on the Bill on the Promotion of Businesses to Develop and Manufacture Energy and Environmentally Friendly Products, JFC is authorized to provide loans to designated financial institutions in order to assist in the smooth financing of required funds for the execution of business by companies that develop or manufacture energy and environmentally friendly products.

In order to achieve the above mentioned objectives, JFC divides its operations, based on JFC Act and other relative Acts, into nine reportable segments;

1 Micro Business and Individual Operations

JFC provides a wide range of loans closely related to people’s lives, such as business loans to micro/small enterprises for its stable management, loans to environmental health industry for the improvement of sanitation standard, educational loans to those who have financial difficulties, and loans secured by pensions.

2 Agriculture, Forestry, Fisheries and Food Business Operations

JFC provides loans for supplementing the financing provided by private financial institutions and supplying long-term funds at a low interest rate aimed at businesses engaged in various industries including agriculture, forestry, fisheries and food manufacturing, in order to contribute to the sustainable and robust development of the agriculture, forestry, fisheries business and to ensure the stable supply of food. In addition, JFC provides support programs for securitizing loans provided by general financial institutions for agriculture-related businesses.

- 39 -

3 SME Loan Programs and Securitization Support Programs (“Guarantee-type Operation”)

JFC provides a stable supply of long-term funds in order to supplement private financial institutions and support the growth and development of SMEs. In loan programs, JFC provides direct or indirect loans to SMEs, and acquires bonds issued by SMEs. In securitization support programs, JFC implements operation related to the securitization of loan claims and account receivables.

4 Securitization Support Programs (“Purchase-type Operation”)

JFC purchases unsecured loan claims of SMEs from private financial institutions in order to promote the supply of unsecured funds to SMEs and to foster the securitization market for SME loan claims. In addition, by utilizing Credit Default Swap agreements, JFC supports securitization transactions by partially undertaking the credit risk of SMEs.

5 Credit Insurance Programs

JFC provides insurance on Credit Guarantee Corporations (CGCs) guaranteed liabilities associated with loans to SMEs to facilitate the smooth flow of funds to SMEs. In addition, JFC provides loans to CGCs, and implements Special Insurance Programs for Mid-size Enterprises and Transitional Operation of the Machinery Credit Insurance Programs,

6 JBIC Operations

JFC conducts the JBIC Operations to fulfill the following four missions in order to contribute to the sound development of the international and Japanese economy: (a) promoting overseas development and secure resources which are strategically important for Japan, (b) maintaining and improving the international competitiveness of Japanese industries, (c) promoting the overseas business having the purpose of preserving the global environment, such as preventing global warming, and (d) taking appropriate measures with respect to the disruptions to the international financial order. In order to execute the above missions, JFC mainly conducts following operations, such as export loans, import loans, overseas investment loans, and equity participation.

7 Financial Operations for Facilitating Realignment of United States Forces in Japan

JFC provides loans necessary for projects to facilitate the realignment of U.S. Forces in Japan, in conformity to the Act on Special Measures Concerning Smooth Implementation of Realignment of United States Forces in Japan.

8 Operations to facilitate Crisis Responses

JFC provides a certain credit to designated financial institutions in times of crises certified by competent ministers such as financial disorder, large-scale disasters and other similar events both at home and abroad.

9 Operations to Facilitate Specific Businesses Promotion

JFC provides loans to designated financial institutions appointed by the competent minister in order to assist in the smooth financing of required funds for the execution of business by companies that develop or manufacture energy and environmentally friendly products.

- 40 -

(2) Basis of calculation for segment information by reportable segments

The accounting policies of segment are substantially the same as those described in “Significant accounting policies” in Note 2. Segment profit or loss is based on net profit or net loss.

(3) Segment information by reportable segments

	(In millions of yen)
	Micro Business and Individual Operations			Agriculture, Forestry, Fisheries, and Food Business Operations			SME Loan Programs and Securitization support Programs (Guarantee type Operation)			Securitization Support Programs (Purchase type Operation)		Credit Insurance Programs
Ordinary income
Ordinary income from outside customers		161,802			73,309			124,929			423		151,356
Inter-segment ordinary income		184			11			43			0		8
Total		161,987			73,321			124,973			423		151,365
Segment profit (loss)		(54,848	)		(141	)		(49,727	)		683		(812,011	)
Segment assets		7,199,339			2,637,650			6,099,356			25,957		2,835,575
Segment liabilities		6,976,748			2,309,594			5,733,541			2,722		1,821,736
Other items
Depreciation		3,570			1,040			1,870			—		400
Interest income		152,501			53,858			109,857			365		3,279
Interest expense		51,630			46,490			50,848			9		—
Extraordinary income		104			1,961			191			489		1,130
Extraordinary loss		6,081			3,311			5,289			—		36
(Impairment loss)		(337	)		(42	)		(33	)		—		(27	)
Increase in property, plant and equipment, and intangible assets		44,750			28,284			36,934			—		19,908
Provision of allowance for loan loss		82,653			3,851			85,129			—		—
Provision of reserve for insurance policy liabilities		—			—			—			—		371,104

	(In millions of yen)
	JBIC Operations		Facilitating Realignment of United States Forces in Japan		Operations to Facilitate Crisis Responses			Operations to Facilitate Specific Businesses Promotion			Adjustments and Eliminations			TOTAL
Ordinary income
Ordinary income from outside customers		197,199		411		58,794			13			(135	)		768,105
Inter-segment ordinary income		18		—		—			—			(267	)		—
Total		197,217		411		58,794			13			(402	)		768,105
Segment profit (loss)		58,783		241		(29,464	)		(16	)		—			(886,503	)
Segment assets		12,781,643		360		5,190,325			20,137			(479	)		36,789,867
Segment liabilities		10,733,129		119		4,803,160			20,034			(479	)		32,400,307
Other items
Depreciation		1,586		0		27			0			—			8,496
Interest income		178,661		—		55,546			0			—			554,071
Interest expense		118,777		—		55,024			0			(0	)		322,782
Extraordinary income		9,142		—		—			—			(10,335	)		2,683
Extraordinary loss		0		—		—			—			(1,130	)		13,587
(Impairment loss)		—		—		—			—			—			(441	)
Increase in property, plant and equipment, and intangible assets		1,904		0		0			13			—			131,797
Provision of allowance for loan loss		—		—		30			8			(9,205	)		162,468
Provision of reserve for insurance policy liabilities		—		—		—			—			—			371,104

- 41 -

	(In millions of U.S. Dollars)
	Micro Business and Individual Operations			Agriculture, Forestry, Fisheries, and Food Business Operations			SME Loan Programs and Securitization support Programs (Guarantee type Operation)			Securitization Support Programs (Purchase type Operation)		Credit Insurance Programs
Ordinary income
Ordinary income from outside customers		1,946			882			1,503			5		1,820
Inter-segment ordinary income		2			0			1			0		0
Total		1,948			882			1,504			5		1,820
Segment profit (loss)		(659	)		(2	)		(598	)		8		(9,766	)
Segment assets		86,583			31,722			73,354			312		34,102
Segment liabilities		83,906			27,776			68,954			33		21,909
Other items
Depreciation		43			13			22			—		5
Interest income		1,834			648			1,321			4		40
Interest expense		621			559			612			0		—
Extraordinary income		1			24			2			6		14
Extraordinary loss		73			40			64			—		0
(Impairment loss)		(4	)		(1	)		(0	)		—		(0	)
Increase in property, plant and equipment, and intangible assets		538			340			444			—		240
Provision of allowance for loan loss		994			46			1,024			—		—
Provision of reserve for insurance policy liabilities		—			—			—			—		4,463

	(In millions of U.S. Dollars)
	JBIC Operations		Facilitating Realignment of United States Forces in Japan		Operations to Facilitate Crisis Responses			Operations to Facilitate Specific Businesses Promotion			Adjustments and Eliminations			TOTAL
Ordinary income
Ordinary income from outside customers		2,372		5		707			0			(2	)		9,238
Inter-segment ordinary income		0		—		—			—			(3	)		—
Total		2,372		5		707			0			(5	)		9,238
Segment profit (loss)		707		3		(354	)		(0	)		—			(10,661	)
Segment assets		153,718		4		62,421			242			(6	)		442,452
Segment liabilities		129,082		1		57,765			241			(6	)		389,661
Other items
Depreciation		19		0		0			0			—			102
Interest income		2,149		—		668			0			—			6,664
Interest expense		1,428		—		662			0			(0	)		3,882
Extraordinary income		110		—		—			—			(125	)		32
Extraordinary loss		0		—		—			—			(14	)		163
(Impairment loss)		—		—		—			—			—			(5	)
Increase in property, plant and equipment, and intangible assets		23		0		0			0			—			1,585
Provision of allowance for loan loss		—		—		0			0			(110	)		1,954
Provision of reserve for insurance policy liabilities		—		—		—			—			—			4,463

Notes

1) Ordinary income is shown in place of Sales for non-financial companies.

2) Adjustments are made as follows;

• Adjustments for segment profits include ¥402 million ($5 million) of elimination of inter-segment transactions.

• Adjustments for segment assets include ¥479 million ($6 million) of elimination of inter-segment transactions.

• Adjustments for segment liabilities include ¥479 million ($6 million) of elimination of inter-segment transactions.

• Adjustments for interest expense include ¥0 million ($0 million) of elimination of inter-segment transactions.

• Adjustments for extraordinary income/ loss stand for elimination of inter-segment transactions.

• Adjustments for provision of allowance for loan losses stand for elimination of inter-segment transactions.

(Additional Information)

JFC has adopted the standard of “Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” ( ASBJ Statement No. 17, March 27, 2009) and “Guidance on Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (ASBJ Guidance No. 20, March 21, 2008) from the fiscal year ended March 31,2011.

(4) Related Information

Current Fiscal Year (April 1, 2010 to March 31, 2011)

a. Information about Services

JFC classifies its operation into nine operation accounts for financial reporting purposes. Refer to “(3) Segment information by reportable segments” for information about Services.

b. Information about Geographical Areas

(a) Ordinary income

	In millions of yen		(In millions of U.S. dollars)
Japan		¥660,063		($7,938)
Outside Japan		¥108,042		($1,299)
Total		¥768,105		($9,238)

Notes:	1.	Ordinary income is shown in place of Sales for non-financial companies.
	2.	Ordinary income is classified into “Japan” and “Outside Japan” depending on the customer’s location.

(b) Property, plant and equipment

The information about property, plant and equipment is omitted since more than 90% of property, plant and equipment on the Balance Sheet are located in Japan.

c. Information about Major Customers

The information about major customers is omitted since there is no transactions with a certain customer which result in more than 10% of ordinary income on the Statement of Operation.

(5) Information about impairment loss of property, plant and equipment in Reportable Segments

  Refer to “(3) Segment information by reportable segments”.

(6) Information about the amortization and balance of goodwill in Reportable Segments

  Not applicable

(7) Information about the gains from recognition of negative goodwill in Reportable Segments

  Not applicable

- 42 -

20. Retirement benefits

JFC has a defined benefit pension plan comprising of a welfare pension fund plan and a lump-sum severance indemnity plan.

(a) The funded status of the pension plans

		March 31, 2011			March 31, 2010			March 31, 2011
Disposition		(In millions of yen)			(In millions of yen)			(In millions of U.S. dollars)
Projected benefit obligation	(A)	¥	(272,660	)	¥	(272,792	)	$	(3,279	)
Fair value of plans’ assets	(B)		67,197			69,215			808
Unfunded pension obligation	(C) = (A) + (B)		(205,462	)		(203,577	)		(2,471	)
Unrecognized prior service costs	(D)		(3,665	)		(1,435	)		(44	)
Actuarial unrecognized difference	(E)		2,693			680			32
Net amount recognized on the balance sheet	(F) = (C) + (D) + (E)		(206,434	)		(204,332	)		(2,483	)
Prepaid pension cost	(G)		—			—
Provision for retirement benefits	(H) = (F) – (G)		(206,434	)		(204,332	)		(2,483	)
(b) Component of pension cost
		March 31, 2011			March 31, 2010			March 31, 2010
Disposition		(In millions of yen)			(In millions of yen)			(In millions of U.S. dollars)
Service cost		¥	7,337		¥	7,607		$	88
Interest cost			5,452			5,408			66
Expected return on plans’ assets			(1,384	)		(1,184	)		(17	)
Amortization of prior service cost accounted for as expense			(164	)		(12	)		(2	)
Actuarial differences accounted for as expense			177			1,096			2
Other costs			—			—			—
Net pension cost			11,418			12,916			137

(Note)     Employee contributions to pension funds have been deducted from the Service cost.

(c) Principal assumptions made

	March 31, 2011	March 31, 2010
Discount rate	2.0%	2.0%
Expected rate of return on plan assets	2.0%	2.0%
Method of attributing the projected benefits to periods of services	Straight-line basis	Straight-line basis
Terms to amortize unrecognized prior service costs	10 years	10 years
Terms to amortize actuarial unrecognized differences	10 years	10 years

- 43 -

21. Deferred tax accounting

JFC does not apply deferred tax accounting since JFC is a nontaxable entity classified in the article 2, Paragraph 5 of the Corporation Tax Act (Act No. 34 of 1965).

22. Profit and Loss on equity method

	March 31, 2011		March 31, 2010			March 31, 2011
	(In millions of yen)		(In millions of yen)			(In millions of U.S. dollars)
Investment in affiliates	¥	54,223	¥	26,887		$	652
Investment in affiliates (equity method)		54,135		26,722			651
Profit or Loss of Investment in affiliates (equity method)		76		(15	)		1

23. Related party transaction

Related party Transactions in the fiscal year ended March 31, 2010 are as follows:

(a) Transactions with parent company and major shareholder companies

	(In millions of yen)
	Corporate name	Location	Business	Ratio to Total Voting Rights (%)	Relation with related parties	Transactions	Amounts of transactions		Items	Balance as of March 31, 2010
Principal shareholder	Ministry of Finance (Minister of Finance) (Note i)	Tokyo, Chiyoda-ku	Administration for policy based financing	100 (Direct)	Receipt of fund etc.	Underwriting of capital increase (Note ii)	¥	2,851,230	—		—
						Receipts from general account of the national budget		2,456	—		—
						Receipt of funds (Note iii)		8,931,988	Borrowings		20,994,807
						Repayment of borrowing		3,647,054
						Payment of interest on borrowings		213,248	Accrued expenses		39,613
						Deposit of funds (Note iv)		4,156,500	Due from banks		2,313,400
						Guarantee for corporate bonds (Note v)		3,694,844	—		—

(Note)

(i) Transactions with the ministries and agencies other than Ministry of Finance are as follows:

- Small and Medium Enterprise Agency

Receipts from the national budget ¥17,683 million

- Ministry of Health, Labor and Welfare Ministry

Receipts from the national budget ¥881 million

- Agency for Natural Resources and Energy

Receipts from the national budget ¥13 million

- Ministry of Agriculture, Forestry and Fisheries

Receipts from the national budget ¥15,022 million

Receipt of borrowed money ¥8,323 million

Repayment of borrowed money ¥10,616 million

(ii) The underwriting of capital increase represents the increase in capital through shareholder allocation by JFC at an allocation amount of ¥1 per share.

(iii) The receipts of funds represents borrowing under the FILP and for this borrowing, the interest rates are applied under the FILP agreement.

(iv) Deposit of funds is the deposit for the FILP and the interest rates applicable under the FILP are applied.

(v) No guarantee fee has been paid for the guarantee of bonds.

(vi) Figures in the table above do not include consumption taxes.

(b) Transactions with fellow subsidiaries and affiliates’ subsidiaries

	(In millions of yen)
	Corporate name	Location	Capital	Business	Ratio  to Total Voting Rights	Relation with related parties	Transactions	Amounts of transactions	Items	Balance as of March 31, 2010
Companies that had the majority of their voting rights held by principal shareholders	Independent administrative agency Agriculture, Forestry and Fisheries Credit Fund	Tokyo, Chiyoda-ku	¥215,815	Credit insurance programs	—	Acceptance of trusted fund	Receipts of entrust funds (Note i)	¥1,400	Entrusted fund	¥37,288
							Repayment of entrusted fund	814
	Development Bank of Japan, Inc.	Tokyo, Chiyoda-ku	1,181,194	Policy- based finance	—	Designated financial institution for Crisis Response	Lend funds (Note ii)	2,479,334	Loan on deed	3,199,746
							Receipts of the interests	25,620	Accrued income	971
							Securities for damage (Note iii)	171,025	—	—
	Shoko Chukin Bank	Tokyo, Chuo-ku	218,653	Small and medium corporate finance	—	Designated financial institution for Crisis Response	Lend funds (Note ii)	1,390,000	Loan on deed	1,460,000
							Receipts of the interests	5,305	Accrued income	300
							Security for damage (Note iii)	1,071,725	—	—

(Note)

(i) Entrusted funds represent the amounts received on an interest-free basis from the Agriculture, Forestry and Fisheries Credit Foundations in accordance with the Act on Temporary Measures concerning Fund for Improvement of Forestry Management Framework (Act No. 51 of 1979) and are provided as loans on an interest-free basis to help revitalize the forestry infrastructure.

(ii) Loan funds are provided in accordance with terms and conditions approved by the competent minister in charge in accordance with Article 15 of the JFC Act.

(iii) Guarantee insurance is provided in accordance with terms and other conditions approved by the competent minister in accordance with Article 15 of the JFC Act.

(iv) Figures in the table above do not include consumption taxes.

- 44 -

(c) Transactions with directors and major shareholders (not company)

(In millions of yen)

Name of corporate or individual

Location

Capital

Business

Ratio  to Total Voting Rights

Relation of related parties

Transactions

Amounts of transactions

Account

Balance as of March 31, 2010

Directors or their immediate relatives

Toshio Nakamura

—

—

Medical office

None

Brother of the director of JFC

Loans (Note i)

¥

—

Loans

¥

17

Directors or their immediate relatives of companies and other entities that hold a majority of voting rights

Mikasa Co., Ltd.

Tokyo, Minato-ku

53

Wholesale of precision machinery components

None

Representative director of Mikasa Co., Ltd. is father of director of JFC

Loans (Note i)

143

Loans

129

(Note)

( i ) Terms and conditions for loan is the same as that of general customers.

( ii ) Figures in the table above do not include consumption taxes.

Related party Transactions in the fiscal year ended March 31, 2011 are as follows:

(a) Transactions with parent company and major shareholder companies

	(In millions of yen)
	Corporate name	Location	Business	Ratio to Total Voting Rights (%)	Relation with related parties	Transactions	Amounts of transactions		Items	Balance as of March 31, 2011
Principal shareholder	Ministry of Finance (Minister of Finance) (Note i)	Tokyo, Chiyoda-ku	Administration for policy based financing	100 (Direct)	Receipt of fund etc.	Underwriting of capital increase (Note ii)	¥	702,050	—		—
						Receipts from general account of the national budget		4,326	—		—
						Receipt of funds (Note iii)		4,972,810	Borrowings		21,824,109
						Repayment of borrowing		3,990,970
						Payment of interest on borrowings		222,483	Accrued expenses		37,446
						Deposit of funds (Note iv)		2,375,300	Due from banks		1,771,500
						Guarantee for corporate bonds (Note v)		3,571,069	—		—

- 45 -

	(In millions of U.S. dollars)
	Corporate name	Location	Business	Ratio to Total Voting Rights (%)	Relation with related parties	Transactions	Amounts of transactions		Items	Balance as of March 31, 2011
Principal shareholder	Ministry of Finance (Minister of Finance) (Note i)	Tokyo, Chiyoda-ku	Administration for policy based financing	100 (Direct)	Receipt of fund etc.	Underwriting of capital increase (Note ii)	$	8,443	—		—
						Receipts from general account of the national budget		52	—		—
						Receipt of funds (Note iii)		59,805	Borrowings		262,467
						Repayment of borrowing		47,997
						Payment of interest on borrowings		2,676	Accrued expenses		450
						Deposit of funds (Note iv)		28,566	Due from banks		21,305
						Guarantee for corporate bonds (Note v)		42,947	—		—

(Note)

(i) Transactions with the ministries and agencies other than Ministry of Finance are as follows:

- Ministry of Economy, Trade and Industry

Receipts from the national budget ¥13 million ($0 million)

- Small and Medium Enterprise Agency

Receipts from the national budget ¥18,333 million ($220 million)

- Agency for Natural Resources and Energy

Receipts from the national budget ¥11 million ($0 million)

- Ministry of Health, Labor and Welfare Ministry

Receipts from the national budget ¥1,229 million ($15 million)

- Ministry of Agriculture, Forestry and Fisheries

Receipts from the national budget ¥19,229 million ($231 million)

Repayment of borrowed money ¥12,001 million ($144 million)

(ii) The underwriting of capital increase represents the increase in capital through shareholder allocation by JFC at an allocation amount of ¥1 ($0.01) per share.

(iii) The receipts of funds represents borrowing, under the FILP, and for this borrowing, the interest rates are applied under the FILP agreement.

(iv) Deposit of funds is the deposit for the FILP and the interest rates applicable under the FILP are applied.

(v) No guarantee fee has been paid for the guarantee of bonds.

(vi) Figures in the table above do not include consumption taxes.

- 46 -

(b) Transactions with fellow subsidiaries and affiliates’ subsidiaries

Transactions stated here in the previous fiscal year’s annual report as transactions with fellow subsidiaries and affiliates’ subsidiaries (excluding transactions with the Independent Administrative Agency Agriculture, Forestry and Fisheries Credit Fund) have been omitted commencing this fiscal year end because the terms and conditions of these transactions are obviously same as those of general transactions.

(c) Transactions with directors and major shareholders (not company)

Transactions stated here in the previous fiscal year’s annual report as transactions with directors and major shareholders (not company) have been omitted commencing this fiscal year end because the terms and conditions of these transactions are obviously same as those of general transactions.

24. Amounts per share

Amounts per share as of fiscal year ended March 31, 2011 and 2010 are calculated as follows:

	March 31, 2011		March 31, 2010		March 31, 2011
	(In Yen)				(In U.S. dollars)
Net Assets per share of common stock	¥	0.57	¥	0.65	$	0.01
Net loss per share of common stock	¥	0.12	¥	0.21	$	0.00
(Note) 1. Net assets per share of common stock is based on the following information.
	March 31, 2011		March 31, 2010		March 31, 2011
	(In millions of yen)				(In millions of U.S. dollars)
Net Assets	¥	4,389,560	¥	4,574,609	$	52,791
Deductions from net assets		—		—		—
Net Assets related to common stock	¥	4,389,560		4,574,609		52,791
Year-end outstanding shares of common stock on which net assets per share was calculated		7,696,424,407 Thousands of shares		6,994,374,407 Thousands of shares
2. Net loss per share is based on the following information. Diluted net loss per share of common stock is not presented since there are no diluted stocks.
	March 31, 2011		March 31, 2010		March 31, 2011
	(In millions of yen)				(In millions of U.S. dollars)
Net loss		886,503		1,112,890	$	10,661
Amount not attribute to common stock		—		—		—
Net loss related to common stock		886,503		1,112,890		10,661
Average outstanding shares of common stock (during the period)		7,142,797,396 Thousands of shares		5,283,363,120 Thousands of shares

- 47 -

25. Subsequent Events

(a) Passage of the Japan Bank for International Cooperation Act

The Japan Bank for International Cooperation Act (hereafter, the “New JBIC Act”) was passed on April 28, 2011 at the 177^th ordinary session of the Diet. Based on this Act, on April 1, 2012, JBIC will be separated from JFC to form Japan Bank for International Cooperation Co., Ltd. (hereafter “New JBIC”), and effective on the same date, JFC’s JBIC Operations and Financial Operations for Facilitating Realignment of United States Forces in Japan will be transferred to the New JBIC.

JFC will underwrite the stock for the New JBIC, and will transfer this stock without compensation to the Japanese government at the time the New JBIC is established on April 1, 2012. Effective the same day, assets and liabilities relating to JFC’s JBIC operations and Financial Operations for Facilitating Realignment of United States Forces in Japan will be assumed by the New JBIC. The amount of assets and liabilities to be assumed will be the assessed amount as determined by an evaluation committee based on the New JBIC Act. After the establishment of the New JBIC, profit and loss relating to JFC’s JBIC Operations and Financial Operations for Facilitating Realignment of United States Forces in Japan will no longer be recognized as profit and loss of JFC. The status of JFC’s JBIC Operations and Financial Operations for Facilitating Realignment of United States Forces in Japan can be found in Note 19. Segment information.

(b) The Board of Directors of JFC resolved on May 24, 2011 to issue new shares by way of allotment to shareholders as of July 4, 2011.

(i) Account for Micro Business and Individual Operations

Type and number of shares	74,614,000,000 shares of common stock
Issue price	1 yen per share	0 U.S. dollar per share
Total issue amount	74,614,000,000 yen	897,342,153 U.S. dollars
Amount incorporated into Capital stock	1 yen per share	0 U.S. dollar per share
Amount incorporated into Legal capital surplus	—	—
Total amount of incorporated into Capital stock	74,614,000,000 yen	897,342,153 U.S. dollars
Total amount of incorporated into Legal capital surplus	—	—
Payment date	July 4, 2011
Purpose of use	To lower the interest rate of special loans provided to aid reconstruction from the Great East Japan Earthquake

(ii) Account for Agriculture, Forestry, Fisheries and Food Business Operations

Type and number of shares	8,973,000,000 shares of common stock
Issue price	1 yen per share	0 U.S. dollar per share
Total issue amount	8,973,000,000 yen	107,913,410 U.S. dollars
Amount incorporated into Capital stock	1 yen per share	0 U.S. dollar per share
Amount incorporated into Legal capital surplus	—	—
Total amount of incorporated into Capital stock	8,973,000,000 yen	107,913,410 U.S. dollars
Total amount of incorporated into Legal capital surplus	—	—
Payment date	July 4, 2011
Purpose of use	To provide effectively unsecured and unguaranteed loans in order to enable smooth access to financing

(iii) Account for SME Loan Programs and Securitization Support Programs (Guarantee-type Operation)

Type and number of shares	62,500,000,000 shares of common stock
Issue price	1 yen per share	0 U.S. dollar per share
Total issue amount	62,500,000,000 yen	751,653,638 U.S. dollars
Amount incorporated into Capital stock	1 yen per share	0 U.S. dollar per share
Amount incorporated into Legal capital surplus	—	—
Total amount of incorporated into Capital stock	62,500,000,000 yen	751,653,638 U.S. dollars
Total amount of incorporated into Legal capital surplus	—	—
Payment date	July 4, 2011
Purpose of use	To lower the interest rate of special loans provided to aid reconstruction from the Great East Japan Earthquake

(iv) Account for Credit Insurance Programs

Type and number of shares	77,100,000,000 shares of common stock
Issue price	1 yen per share	0 U.S. dollar per share
Total issue amount	77,100,000,000 yen	927,239,928 U.S. dollars
Amount incorporated into Capital stock	—	—
Amount incorporated into Legal capital surplus	1 yen per share	0 U.S. dollar per share
Total amount of incorporated into Capital stock	—	—
Total amount of incorporated into Legal capital surplus	77,100,000,000 yen	927,239,928 U.S. dollars
Payment date	July 4, 2011
Purpose of use	To augment insurance platforms and ensure stable system management

Type and number of shares	281,300,000,000 shares of common stock
Issue price	1 yen per share	0 U.S. dollar per share
Total issue amount	281,300,000,000 yen	3,383,042,694 U.S. dollars
Amount incorporated into Capital stock	—	—
Amount incorporated into Legal capital surplus	1 yen per share	0 U.S. dollar per share
Total amount of incorporated into Capital stock	—	—
Total amount of incorporated into Legal capital surplus	281,300,000,000 yen	3,383,042,694 U.S. dollars
Payment date	July 4, 2011
Purpose of use	For the establishment of an emergency provision for reconstruction from the Great East Japan Earthquake

(v) Account for Operations to Faciliate Crisis Responses

Type and number of shares	44,100,000,000 shares of common stock
Issue price	1 yen per share	0 U.S. dollar per share
Total issue amount	44,100,000,000 yen	530,366,807 U.S. dollars
Amount incorporated into Capital stock	1 yen per share	0 U.S. dollar per share
Amount incorporated into Legal capital surplus	—	—
Total amount of incorporated into Capital stock	44,100,000,000 yen	530,366,807 U.S. dollars
Total amount of incorporated into Legal capital surplus	—	—
Payment date	July 4, 2011
Purpose of use	Act as resource for credit insurance underwriting and interest rate subsidy

(c) The Board of Directors of JFC resolved on June 6, 2011 to issue new shares by way of allotment to shareholders as of June 30, 2011

Type and number of shares	100,000,000,000 shares of common stock
Issue price	1 yen per share	0 U.S. dollar per share
Total issue amount	100,000,000,000 yen	1,202,645,821 U.S. dollars
Amount incorporated into Capital stock	1 yen per share	0 U.S. dollar per share
Amount incorporated into Legal capital surplus	—	—
Total amount of incorporated into Capital stock	100,000,000,000 yen	1,202,645,821 U.S. dollars
Total amount of incorporated into Legal capital surplus	—	—
Payment date	June 30, 2011
Purpose of use	Act as resource for implementing strategic international finance mainly through Enhanced Facility for Global Cooperation in Low Carbon Infrastructure and Equity Investment (E-FACE)

- 48 -

26. Fixed assets

Fixed assets as of March 31, 2010 are as follows:

	(In millions of yen)
	Balance at the beginning of the fiscal year		Increase during the fiscal year		Decrease during the fiscal year			Balance at the end of the fiscal year		Accumulated depreciation		Depreciation		Net fixed assets
Property, plant and equipment
Buildings	¥	31,423	¥	2,977	¥	243 (47	)	¥	34,156	¥	3,985	¥	2,647	¥	30,171
Land		248,347		—		1,560 (1,560	)		246,787		—		—		246,787
Lease Assets		4,837		1,541		715			5,664		1,723		1,695		3,940
Construction in progress		787		2,097		2,744			140		—		—		140
Other		1,762		375		26			2,110		1,141		702		969
Total property, plant and equipment	¥	287,158	¥	6,990	¥	5,289 (1,607	)	¥	288,859	¥	6,851	¥	5,046	¥	282,008
Intangible assets
Software	¥	9,286	¥	1,931		1		¥	11,215	¥	4,248	¥	2,832	¥	6,967
Lease Assets		1,605		1,620		95			3,130		579		481		2,550
Other		1,284		2,024		351			2,957		0		0		2,957
Total intangible assets	¥	12,175	¥	5,576	¥	448		¥	17,304	¥	4,828	¥	3,314	¥	12,475

Fixed assets as of March 31, 2011 are as follows:

	(In millions of yen)
	Balance at the beginning of the fiscal year		Increase during the fiscal year		Decrease during the fiscal year			Balance at the end of the fiscal year		Accumulated depreciation		Depreciation		Net fixed assets
Property, plant and equipment
Buildings	¥	34,156	¥	1,882	¥	1,531 (26	)	¥	34,508	¥	5,769	¥	2,126	¥	28,739
Land		246,787		—		142,435 (415	)		104,352		—		—		104,352
Lease Assets		5,664		1,514		532			6,645		2,893		1,634		3,752
Construction in progress		140		117,347		1,694			115,793		—		—		115,793
Other		2,110		1,112		115			3,107		1,661		624		1,446
Total property, plant and equipment	¥	288,859	¥	121,857	¥	146,309 (441	)	¥	264,407	¥	10,324	¥	4,384	¥	254,083
Intangible assets
Software	¥	11,215	¥	5,718		—		¥	16,934	¥	7,389	¥	3,140	¥	9,545
Lease Assets		3,130		1,762		11			4,881		1,539		971		3,342
Other		2,957		2,458		4,546			869		0		0		869
Total intangible assets	¥	17,304	¥	9,940	¥	4,558		¥	22,685	¥	8,928	¥	4,111	¥	13,756

	(In millions of U.S. dollars)
	Balance at the beginning of the fiscal year		Increase during the fiscal year		Decrease during the fiscal year			Balance at the end of the fiscal year		Accumulated depreciation		Depreciation		Net fixed assets
Property, plant and equipment
Buildings	$	411	$	23	$	19		$	415	$	69	$	26	$	346
Land		2,968		—		(0 1,713	)		1,255		—		—		1,255
Lease Assets		68		18		(5 6	)		80		35		20		45
Construction in progress		2		1,411		20			1,393		—		—		1,393
Other		25		14		2			37		20		7		17
Total property, plant and equipment	$	3,474	$	1,466	$	1,760 (5	)	$	3,180	$	124	$	53	$	3,056
Intangible assets
Software	$	135	$	69	$	—		$	204	$	89	$	38	$	115
Lease Assets		37		21		0			58		18		11		40
Other		36		30		55			11		0		0		11
Total intangible assets	$	208	$	120	$	55		$	273	$	107	$	49	$	166

(Note) Parenthesis () in the “Decrease during the fiscal year” column indicates the impairment loss incurred.

- 49 -

27. Reserves

Reserves as of March 31, 2010 are as follows:

	(In millions of yen)
	Balance at the beginning  of the fiscal year		Increase during the fiscal year		Decrease during the fiscal year (use for purpose)		Decrease during the fiscal year (others)		Balance at the end of the fiscal year
Reserve for insurance policy liabilities	¥	1,017,813	¥	421,661		—		—	¥	1,439,474
Allowance for loan losses		417,878		348,372	¥	39,474	¥	288,123		438,653
General allowance for loan losses		148,499		195,734		—		148,499		195,734
Specific allowance for loan losses		251,616		133,019		39,474		121,861		223,300
Allowance for possible losses on specific overseas loans		17,762		19,617		—		17,762		19,617
Provision for bonuses		5,808		5,332		5,808		—		5,332
Provision for directors’ bonuses		29		26		29		—		26
Provision for directors’ retirement benefits		25		46		—		—		72
Reserve for compensation losses		3,000		87,310		—		3,000		87,310
Total	¥	1,444,556	¥	862,749	¥	45,311	¥	291,124	¥	1,970,869

Reserves as of March 31, 2011 are as follows:

	(In millions of yen)
	Balance at the beginning  of the fiscal year		Increase during the fiscal year		Decrease during the fiscal year (use for purpose)		Decrease during the fiscal year (others)		Balance at the end of the fiscal year
Reserve for insurance policy liabilities	¥	1,439,474	¥	371,104		—		—	¥	1,810,579
Allowance for loan losses		438,653		414,638	¥	30,193	¥	322,072		501,025
General allowance for loan losses		195,734		270,565		—		195,734		270,565
Specific allowance for loan losses		223,300		126,081		30,193		106,720		212,468
Allowance for possible losses on specific overseas loans		19,617		17,991		—		19,617		17,991
Provision for bonuses		5,332		5,167		5,332		—		5,167
Provision for directors’ bonuses		26		25		26		—		25
Provision for directors’ retirement benefits		72		47		3		—		116
Reserve for compensation losses		87,310		59,757		55,519		31,791		59,757
Total	¥	1,970,869	¥	850,740	¥	91,074	¥	353,863	¥	2,376,671
	(In millions of U.S. dollars)
	Balance at the beginning  of the fiscal year		Increase during the fiscal year		Decrease during the fiscal year (use for purpose)		Decrease during the fiscal year (others)		Balance at the end of the fiscal year
Reserve for insurance policy liabilities	$	17,312	$	4,463		—		—	$	21,775
Allowance for loan losses		5,276		4,986	$	363	$	3,873		6,026
General allowance for loan losses		2,354		3,254		—		2,354		3,254
Specific allowance for loan losses		2,686		1,516		363		1,283		2,556
Allowance for possible losses on specific overseas loans		236		216		—		236		216
Provision for bonuses		64		62		64		—		62
Provision for directors’ bonuses		0		0		0		—		0
Provision for directors’ retirement benefits		0		1		0		—		1
Reserve for compensation losses		1,051		719		668		383		719
Total	$	23,703	$	10,231	$	1,095	$	4,256	$	28,583

The main factors in the decrease during the fiscal year in each of the following reserves is as follows:.

General allowance for possible loan losses: Decrease is due to reversal.

Specific allowance for possible loan losses: Decrease is due to reversal.

Allowance for possible losses on specific overseas loans : Decrease is due to reversal.

Reserve for compensation losses: Decrease is due to reversal

- 50 -

28. Bond payable

The major components of bonds payable as of March 31, 2010 are as follows:

	(In millions of yen)
Description of bonds payable	Date of issuance		Balance at the  beginning of the fiscal year		Balance at the end  of current period		Interest rate (%)	Collateral		Maturity date		Remarks
Government guaranteed Natinal Life Bonds 7th-22nd Government guaranteed JFC Bonds, 2nd and 8th		2002.9.19 —   2010.1.19		579,228		629,419 [99,992]	0.70-1.70		General collateral		2010.10.22 —   2018.3.16
11th, 13th, 15th, 17th-18th, 20th, 22nd, 24th-25th, 27th, 29th-38th Natinal Life Bonds (FILP agency bonds) JFC corporate Bonds 1st and 5th		2004.5.18 —   2010.2.16		659,960		409,982 [179,997]	0.261-1.74		General collateral		2009.6.19 —   2013.3.19
4th-13th Agriculture, Forestry, Fisheries and Food Business Bonds JFC Corporate Bond 4th		2003.5.12 —   2009.10.29		113,949		123,942	0.77-2.66		General collateral		2013.3.19 —   2029.9.20
Government guaranteed 1st,2nd Agriculture, Forestry, Fisheries and Food Business Bonds (10year)		2002.10.22 —   2003.11.28		25,954		25,964	1.30-1.50		General collateral		2012.10.30 —   2013.11.29
105th-108th Small and Medium Enterprises Bonds		1999.9.28 —   1999.12.24		230,313		0	1.90-2.00		General collateral		2009.9.28 —   2009.12.24
Government guaranteed 126th, 130th, 134th, 136th, 140th, 142nd, 144th, 146th, 150th, 152nd, 154th, 157th, 162nd, 165th, 167th, 169th, 171st, 173rd-194th Small and Medium Enterprise Bonds		1999.9.21 —   2008.9.18		1,183,623		1,043,963 [339,935]	0.20-2.00		General collateral		2009.6.24 —   2018.9.18
Government guaranteed 1st Euro-yen Small and Medium Enterprises Bonds, 3rd Euro Small and Medium Enterprises Bonds, 10th Swiss Franc Small and Medium Enterprises Bonds		2003.9.24 —   2006.3.8		101,459		101,456 (300,000 thousand euro) (250,000 thousand Swiss Franc) [38,727]	1.10-1.31		General collateral		2010.9.24 —   2012.3.8
6th, 9th-18th, 20th-33th Small and Medium Enterprises Bonds		2003.6.27 —   2008.7.23		784,925		554,955 [199,992]	0.51-1.99		General collateral		2009.6.19 —   2018.3.20
Governmentguaranteed JFC bonds 1st, 3rd-7th, 9th-11th		2009.6.16 —   2010.3.29		—		414,880	0.20-1.30		General collateral		2013.1.25 —   2019.9.17
JFC corporate bonds 2nd and 6th		2009.10.29 —   2010.2.16		—		45,997	0.356-0.72		General collateral		2013.2.15 —   2014.10.29
Government guaranteed JBIC bonds 1st, 6th-17th		1999.11.4 —   2008.6.18		993,457 (8,383,470 thousand U.S. dollars) (1,245,140 thousand euro) (3,000,000 thousand Thai baht)		851,697 (7,388,473 thousand U.S. dollars) (1,246,105 thousand euro) (3,000,000 thousand Thai baht) [148,146]	3.375-7.000		General collateral		2009.11.4 —   2016.3.23		*
Government guaranteed JBIC Foreign Bonds 1st-3rd		2009.6.24 —   2010.2.2		—		627,464 (6,744,024 thousand U.S. dollars)	2.000-2.875		General collateral		2011.6.24 —   2015.2.2
2nd, 4th, 6th, 8th, 10th, 12th-31st JBIC bonds		2001.10.30 —   2008.6.27		1,099,756		1,049,806 [99,997]	0.540-2.090		General collateral		2009.9.18 —   2025.12.19		*
JFC Corporate Bonds 3rd and 7th		2009.10.29 —   2010.2.16		—		69,986	0.618-1.430		General collateral		2014.12.19 —   2019.9.20
Government guaranteed short-term bonds		2009.2.25		299,884		—	—		General collateral		2009.5.25
Total		—		6,072,514		5,949,515	—		—		—		—

- 51 -

The major components of bonds payable as of March 31, 2011 are as follows:

	(In millions of yen)
Description of bonds payable	Date of issuance		Balance at the  beginning of the fiscal year		Balance at the end  of current period		Interest rate (%)	Collateral		Maturity date		Remarks
Government guaranteed Natinal Life Bonds 7th-22nd Government guaranteed JFC Bonds, 2nd, 8th, 13th and 16th		2002.9.19 —   2011.1.21		629,419		589,607 [50,003]	0.30-1.70		General collateral		2010.10.22 —   2018.3.16
18th, 20th, 22nd, 25th, 27th, 30th, 32nd, 34th, 36th-38th National Life Bonds (FILP agency bonds) JFC corporate Bonds 1st, 5th, 8th, 11th and 13th		2005.4.21 —   2010.10.29		409,982		399,995 [209,996]	0.206-1.74		General collateral		2010.4.21 —   2013.3.19
4th-13th Agriculture, Forestry, Fisheries and Food Business Bonds JFC Corporate Bond 4th, 10th, 15th		2003.5.12 —   2010.10.29		123,942		148,946	0.77-2.66		General collateral		2013.3.19 —   2030.10.29
Government guaranteed 1st,2nd Agriculture, Forestry, Fisheries and Food Business Bonds (10year)		2002.10.22 —   2003.11.28		25,964		25,974	1.30-1.50		General collateral		2012.10.30 —   2013.11.29
Government guaranteed134th, 136th, 140th, 142nd, 144th, 146th, 150th, 152nd, 154th, 157th, 162nd, 165th, 167th, 169th, 171st, 173rd, 176th, 178th-194th Small and Medium Enterprise Bonds		2000.4.26 —   2008.9.18		1,043,963		704,258 [139,978]	0.80-1.90		General collateral		2010.4.26 —   2018.9.18
Government guaranteed 1st Euro-yen Small and Medium Enterprises Bonds, 3rd Euro Small and Medium Enterprises Bonds, 10th Swiss Franc Small and Medium Enterprises Bonds		2003.9.24 —   2006.3.8		101,456		62,720 [62,720] (250,000 thousand Swiss Franc)	1.10-4.125		General collateral		2010.9.24 —   2012.3.8
6th, 9th, 10th, 12th, 13th, 15th, 17th, 18th, 20th-24th, 26th, 29th-33rd Small and Medium Enterprises Bonds		2003.6.27 —   2008.7.23		553,655		354,976 [154,997]	0.51-1.99		General collateral		2010.6.21 —   2018.3.20
Government guaranteed JFC bonds 1st, 3rd-7th, 9th-12th, 14th, 15th, 17th		2009.6.16 —   2011.3.22		414,880		554,797	0.20-1.30		General collateral		2013.1.25 —   2020.12.17
JFC corporate bonds 2nd, 6th, 9th, 14th		2009.10.29 —   2010.10.29		45,997		125,997	0.356-0.72		General collateral		2013.2.15 —   2015.9.18
Government guaranteed 29th and 31st Small and Medium Enterprise Bonds		2007.10.25 —   2008.3.17		1,299		—	0.79-1.17		General collateral		2010.10.26 —   2011.3.18
Government guaranteed JBIC bonds 6th-17th		2003.12.2 —   2008.6.18		851,697 (7,388,473 thousand U.S. dollars) (1,246,105 thousand euro) (3,000,000 thousand Thai baht)		636,585 (5,892,565 thousand U.S. dollars) (1,247,071 thousand euro) (0.00 thousand Thai baht) [145,495] [1,749,794 thousand U.S. dollars]	3.375-5.250		General collateral		2010.5.20 —   2016.3.23		*
Government guaranteed JBIC Foreign Bonds 1st-6th		2009.6.24 —   2011.1.21		627,464 (6,744,024 thousand U.S. dollars)		997,127 (11,991,911 thousand U.S. dollars) [207,848] [2,499,680 thousand U.S. dollars]	1.500-2.875		General collateral		2011.6.24 —   2016.1.21
2nd, 4th, 6th, 8th, 10th, 12th, 13th, 15th-31st JBIC bonds		2001.10.30 —   2008.6.27		1,049,806		949,850 [149,994]	0.540-2.090		General collateral		2010.6.21 —   2025.12.19		*
JFC Corporate Bonds 3rd, 7th and 12th		2009.10.29 —   2010.8.9		69,986		119,988	0.421-1.430		General collateral		2014.12.19 —   2019.9.20
Total		—		5,949,515		5,670,825	—		—		—		—

- 52 -

	(In millions of U.S. dollars)
Description of bonds payable	Date of issuance		Balance at the beginning of the fiscal year		Balance at the end of current period		Interest rate (%)	Collateral		Maturity date		Remarks
Government guaranteed Natinal Life Bonds 7th-22nd Government guaranteed JFC Bonds, 2nd, 8th, 13th and 16th		2002.9.19 —   2011.1.21		7,570		7,091 [601]	0.30-1.70		General collateral		2010.10.22 —   2018.3.16
18th, 20th, 22nd, 25th, 27th, 30th, 32nd, 34th, 36th-38th National Life Bonds (FILP agency bonds) JFC corporate Bonds 1st, 5th, 8th, 11th and 13th		2005.4.21 —   2010.10.29		4,931		4,811 [2,526]	0.206-1.74		General collateral		2010.4.21 —   2013.3.19
4th-13th Agriculture, Forestry, Fisheries and Food Business Bonds JFC Corporate Bond 4th, 10th, 15th		2003.5.12 —   2010.10.29		1,491		1,791	0.77-2.66		General collateral		2013.3.19 —   2030.10.29
Government guaranteed 1st,2nd Agriculture, Forestry, Fisheries and Food Business Bonds (10 year)		2002.10.22 —   2003.11.28		312		312	1.30-1.50		General collateral		2012.10.30 —   2013.11.29
Government guaranteed134th, 136th, 140th, 142nd, 144th, 146th, 150th, 152nd, 154th, 157th, 162nd, 165th, 167th, 169th, 171st, 173rd, 176th, 178th-194th Small and Medium Enterprise Bonds		2000.4.26 —   2008.9.18		12,555		8,470 [1,683]	0.80-1.90		General collateral		2010.4.26 —   2018.9.18
Government guaranteed 1st Euro-yen Small and Medium Enterprises Bonds, 3rd Euro Small and Medium Enterprises Bonds, 10th Swiss Franc Small and Medium Enterprises Bonds		2003.9.24 —   2006.3.8		1,220		754 [754] (250,000 thousand Swiss Franc)	1.10-4.125		General collateral		2010.9.24 —   2012.3.8
6th, 9th, 10th, 12th, 13th, 15th, 17th, 18th, 20th-24th, 26th, 29th-33rd Small and Medium Enterprises Bonds		2003.6.27 —   2008.7.23		6,659		4,269 [1,864]	0.51-1.99		General collateral		2010.6.21 —   2018.3.20
Government guaranteed JFC bonds 1st, 3rd-7th, 9th-12th, 14th, 15th, 17th		2009.6.16 —   2011.3.22		4,990		6,672	0.20-1.30		General collateral		2013.1.25 —   2020.12.17
JFC corporate bonds 2nd, 6th, 9th, 14th		2009.10.29 —   2010.10.29		553		1,515	0.356-0.72		General collateral		2013.2.15 —   2015.9.18
Government guaranteed 29th and 31st Small and Medium Enterprises Bonds		2007.10.25 —   2008.3.17		15		—	0.79~1.17		General collateral		2010.10.26 —   2011.3.18
Government guaranteed JBIC bonds 6th-17th		2003.12.2 —   2008.6.18		10,243 (7,388,473 thousand U.S. dollars) (1,246,105 thousand euro) (3,000,000 thousand Thai baht)		7,656 (5,892,565 thousand U.S. dollars) (1,247,071 thousand euro) (0.00 thousand Thai baht) [1,750] [1,749,794 thousand U.S. dollars]	3.375-5.250		General collateral		2010.5.20 —   2016.3.23		*
Government guaranteed JBIC Foreign Bonds 1st-6th		2009.6.24 —   2011.1.21		7,546		11,992 (11,991,911 thousand U.S. dollars) [2,500] [2,499,680 thousand U.S. dollars]	1.500-2.875		General collateral		2011.6.24 —   2016.1.21
2nd, 4th, 6th, 8th, 10th, 12th, 13th, 15th-31st JBIC bonds		2001.10.30 —   2008.6.27		12,625		11,424 [1,804]	0.540-2.090		General collateral		2010.6.21 —   2025.12.19		*
JFC Corporate Bonds 3rd, 7th and 12th		2009.10.29 —   2010.8.9		842		1,443	0.421-1.430		General collateral		2014.12.19 —   2019.9.20
Total		—		71,552		68,200	—		—		—		—

- 53 -

(Note)

(i) The amounts of foreign currencies denominated bonds are shown in original currencies in parentheses (    ).

(ii) Figures indicated in brackets [    ] represent the amounts to be redeemed within one year.

(iii) JFC assumed the obligations of the government guaranteed and non-guaranteed bonds⁽*⁾ from Japan Bank for International Cooperation, and JFC and the Japan International Cooperation Agency (JICA) will be jointly responsible for the obligations of these bonds in accordance with the JFC Act and the Law for Partial Amendment to the Japan International Cooperation Agency Law.

(iv) The redemption schedule of bond payable for each of the next five years as of March 31, 2011 is as follows:

	(In millions of yen)
	Within year		More than1 year Less  than 2 years		More than 2 years Less than 3 years		More than 3 years Less than 4 years		More than 4 years Less than 5 years
Amount	¥	1,121,097	¥	1,502,262	¥	819,510	¥	681,690	¥	788,497
	(In millions of U.S. dollars)
	Within year		More than 1  year Less than 2 years		More than 2 years Less than 3 years		More than 3 years Less than 4 years		More than 4 years Less than 5 years
Amount	$	13,483	$	18,067	$	9,856	$	8,198	$	9,483

29. Borrowings

Borrowings as of March 31, 2010 are as follows:

	Amounts at the  beginning of the fiscal year (In millions of yen)		Amounts at the end of the fiscal year (In millions of yen)		Average interest rate (%)		Due date  of payment
Borrowed money	¥	15,990,564	¥	21,220,659		0.83		—
Borrowings		15,990,564		21,220,659		0.83		2010.5
Lease obligation (Due within one year)		2,146		2,043		—		—
Lease obligation (Due after one year)		3,630		4,420		—		2011.4 —   2014.10
Entrusted Funds		36,703		37,288		—		2026.3 —   2040.3

Borrowings as of March 31, 2011 are as follows:
	Amounts at the  beginning of the fiscal year (In millions of yen)		Amounts at the end of the fiscal year (In millions of yen)		Amounts at the end  of the fiscal year (In millions of U.S. dollars)		Average interest rate (%)		Due date  of payment
Borrowed money	¥	21,220,659	¥	22,036,903	$	265,026		0.91		—
Borrowings		21,220,659		22,036,903		265,026		0.91		2011.5
Lease obligation (Due within one year)		2,403		2,874		35		—		—
Lease obligation (Due after one year)		4,420		4,605		55		—		2012.4 —   2016.3

- 54 -

(Note)

(i) Average interest rate is calculated by the weighted-average interest rate on the outstanding debt balance, net of interest-free borrowings from the government, at the end of the fiscal year.

(ii) Borrowed money includes ¥ 212,794 million ($2,559 million ) of interest-free borrowings from the government.

(iii) As for the lease obligation, there is no average lease rate since the short-cut method is applied for these transactions.

(iv) Borrowed money and lease obligation maturities for the next five years as of March 31, 2011 are as follows:

	(In millions of yen)
	In 1 year		More than 1  year Less than 2 years		More than 2 years Less than 3 years		More than 3 years Less than 4 years		More than 4 years Less than 5 years
Borrowed money	¥	3,633,023	¥	3,563,081	¥	3,679,798	¥	3,768,973	¥	2,811,650
Lease obligation		2,874		2,213		1,699		574		117
	(In millions of U.S. dollars)
	In 1 year		More than 1 year Less than 2 years		More than 2 years Less than 3 years		More than 3 years Less than 4 years		More than 4 years Less than 5 years
Borrowed money	$	43,692	$	42,851	$	44,255	$	45,327	$	33,814
Lease obligation		35		27		20		7		1

30. Asset Retirement Obligation

Not applicable

31. Components of major assets and liabilities

Components of major assets and liabilities as of March 31, 2010 are as follows:

(a) Assets

(i) “Due from bank” includes ¥2,313,400 million of deposit under the FILP and ¥1,421,131 million of deposit in banks.

(ii) “Accrued income” includes ¥60,500 million of accrued interest income on loans and others.

(iii) “Other assets” includes ¥1,077 million of suspense payment on loans, and others.

(b) Liabilities

(i) “Accrued expenses” includes ¥39,613 million of accrued interest expenses on loans, ¥28,169 million of accrued interest expenses on bonds and others.

(ii) “Other Liabilities” includes ¥7,490 million of suspense payments and others.

Components of major assets and liabilities as of March 31, 2011 are as follows:

(a) Assets

(i) “Due from bank” includes ¥1,771,500 million ($21,305 million) of deposit under the FILP and ¥1,582,757 million ($19,035 million) of deposit in banks.

(ii) “Accrued income” includes ¥57,786 million ($695 million) of accrued interest income on loans and others.

(iii) “Other assets” includes ¥9,644 million ($116 million) of account receivable, ¥5,583 million ($67 million) of suspense payment on loans, and others.

(b) Liabilities

(i) “Accrued expenses” includes ¥37,446 million ($450 million) of accrued interest expenses on loans, ¥21,940 million ($264 million) of accrued interest expenses on bonds and others.

(ii) “Other Liabilities” includes ¥7,575 million ($91 million) of suspense payments and others.

- 55 -

EX-99.3

Exhibit 3

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (No. 333-157296) of Japan Finance Corporation of our report dated June 22, 2011, with respect to the non-consolidated financial statements of Japan Finance Corporation included in its Annual Report on Form 18-K for the year ended March 31, 2011.

/s/ Ernst & Young ShinNihon LLC

Ernst & Young ShinNihon LLC

Tokyo, Japan

September 7, 2011

EX-99.4

Exhibit 4

BALANCE SHEET

JBIC Operations (unaudited)

	March 31, 2011			March 31, 2010			March 31, 2011
	(In millions of yen)			(In millions of yen)			(In millions of U.S. dollars)
Assets:
Cash and due from banks	¥	978,074		¥	455,113		$	11,763
Cash		0			0			0
Due from bank		978,074			455,112			11,763
Securities		76,453			44,280			919
Other securities		76,453			44,280			919
Loans and bills discounted		8,376,794			8,771,342			100,743
Loans on deeds		8,376,794			8,771,342			100,743
Other assets		1,001,457			724,223			12,044
Prepaid expenses		234			225			4
Accrued income		29,379			30,685			353
Derivatives other than for trading-assets		966,988			693,022			11,629
Other		4,855			290			58
Property, plant and equipment		37,664			37,903			453
Buildings		3,488			3,554			42
Land		33,881			33,881			407
Lease assets		58			79			1
Construction in progress		2			90			0
Other		233			296			3
Intangible assets		2,349			2,320			29
Software		2,116			2,025			25
Lease assets		218			259			4
Other		14			34			0
Customers’ liabilities for acceptances and guarantees		2,443,266			1,977,071			29,384
Allowance for loan losses		(134,417	)		(145,354	)		(1,617	)
Total assets	¥	12,781,643		¥	11,866,899		$	153,718

1

	March 31, 2011			March 31, 2010			March 31, 2011
	(In millions of yen)			(In millions of yen)			(In millions of U.S. dollars)
Liabilities:
Borrowed money	¥	5,502,495		¥	5,267,246		$	66,176
Borrowings		5,502,495			5,267,246			66,176
Bonds payable		2,703,551			2,598,954			32,514
Other liabilities		71,181			56,394			856
Accrued expenses		29,911			32,809			360
Unearned revenue		38,881			21,534			468
Derivatives other than for trading-liabilities		1,899			1,598			23
Lease obligations		290			356			3
Other		198			94			2
Provision for bonuses		465			511			6
Provision for directors’ bonuses		6			6			0
Provision for retirement benefits		12,135			11,872			146
Provision for directors’ retirement benefits		28			17			0
Acceptances and guarantees		2,443,266			1,977,071			29,384
Total liabilities	¥	10,733,129		¥	9,912,072		$	129,082
Net Assets:
Capital Stock	¥	1,091,000		¥	1,055,500		$	13,121
Retained earnings		801,398			759,218			9,638
Legal retained earnings		742,615			726,011			8,931
Other retained earnings		58,783			33,207			707
Retained earnings brought forward		58,783			33,207			707
Total shareholders’ equity		1,892,398			1,814,718			22,759
Valuation and difference on available for sale securities		(1,665	)		(687	)		(21	)
Deferred gains or losses on hedges		157,781			140,795			1,898
Valuation and translation adjustments		156,115			140,107			1,877
Total net assets	¥	2,048,513		¥	1,954,826		$	24,636
Total liabilities and net assets	¥	12,781,643		¥	11,866,899		$	153,718

2

STATEMENTS OF OPERATIONS

JBIC Operations (unaudited)

	March 31, 2011		March 31, 2010		March 31, 2011
	(In millions of yen)		(In millions of yen)		(In millions of U.S. dollars)
Ordinary income:	¥	197,217	¥	191,178	$	2,372
Interest income		178,661		179,396		2,148
Interest on loans and discounts		122,329		143,212		1,471
Interest and dividends on securities		48		—		1
Interest on deposit with banks		1,199		547		14
Interest on interest swaps		55,061		35,617		662
Other interest income		22		19		0
Fees and Commissions		13,183		11,144		159
Other fees and commissions		13,183		11,144		159
Other ordinary income		74		33		1
Other		74		33		1
Other income		5,298		604		64
Other		5,298		604		64
Ordinary expenses:		147,576		163,355		1,775
Interest expenses		118,777		122,322		1,428
Interest on borrowings and rediscounts		55,696		58,349		670
Interest on bonds		63,081		63,973		758
Fees and commissions payments		1,332		1,107		16
Other fees and commissions		1,332		1,107		16
Other ordinary expenses		3,370		4,679		41
Loss on foreign exchange transactions		2,501		3,416		30
Amortization of bond issuance cost		651		854		8
Expenses on derivatives other than for trading or hedging		8		68		0
Other		209		340		3
General and administrative expenses		15,861		16,392		191
Other expenses		8,233		18,854		99
Provision of allowance for loan losses		8,232		18,853		99
Other		0		0		0
Ordinary profit		49,641		27,823		597
Extraordinary income		9,142		5,388		110
Gain on disposal of noncurrent assets		0		0		0
Recoveries of written-off claims		8,715		5,387		105
Other		425		—		5
Extraordinary losses		0		3		0
Loss on disposal of noncurrent assets		0		3		0
Net income	¥	58,783	¥	33,207	$	707

3

STATEMENTS OF CASH FLOWS

JBIC Operations (unaudited)

	March 31, 2011			March 31, 2010			March 31, 2011
	(In millions of yen)			(In millions of yen)			(In millions of U.S. dollars)
Cash flow from operating activities
Net income	¥	58,783		¥	33,207		$	707
Depreciation and amortization		1,586			1,775			19
Increase (decrease) in allowance for loan losses		(10,936	)		18,853			(132	)
Decrease in provision for bonuses		(45	)		(70	)		(1	)
Decrease in provision for directors’ bonuses		(0	)		(1	)		(0	)
Increase in provision for retirement benefits		263			260			3
Increase in provision for directors’ retirement benefits		11			11			0
Gain on fund management		(178,661	)		(179,396	)		(2,148	)
Financing expenses		118,777			122,322			1,428
Gain related to securities		(3,372	)		(215	)		(40	)
Foreign exchange losses		9,744			5,650			117
Loss (gain) on disposal of noncurrent assets		(0	)		3			(0	)
Net decrease (increase) in loans and bills discounted		394,547			(1,528,273	)		4,745
Net increase in borrowed money		235,249			1,247,399			2,829
Net decrease in deposit		(290,000	)		(210,000	)		(3,488	)
Increase in straight bonds-issuance and redemption		103,824			504,973			1,249
Proceeds from fund management		179,234			193,180			2,156
Payments for finance		(120,913	)		(116,979	)		(1,454	)
Other		(243,009	)		(73,150	)		(2,922	)
Subtotal		255,083			19,550			3,068
Net cash provided by operating activities		255,083			19,550			3,068
Cash flow from investing activities
Purchase of securities		(45,823	)		(13,634	)		(551	)
Proceeds from sales of securities		16,027			38			193
Purchase of property, plant and equipment		(217	)		(164	)		(3	)
Proceeds from sales of property, plant and equipment		1			1			0
Purchase of intangible assets		(1,105	)		(706	)		(13	)
Net cash used in investing activities		(31,116	)		(14,464	)		(374	)
Cash flow from financing activities
Proceeds from issuance of common stock		35,500			20,000			427
Repayments of lease obligations		(157	)		(121	)		(2	)
Payment to national treasury		(16,603	)		(13,419	)		(200	)
Net cash provided by financing activities		18,739			6,459			225
Effect of exchange rate change on cash and cash equivalents		(9,744	)		(5,650	)		(117	)
Net increase in cash and cash equivalents		232,961			5,894			2,802
Cash and cash equivalents at the beginning of period		245,113			239,218			2,948
Cash and cash equivalents at the end of period	¥	478,074		¥	245,113		$	5,750

4

BALANCE SHEET

Financial Operations for Facilitating Realignment of United States Forces in Japan (unaudited)

	March 31, 2011		March 31, 2011
	(In millions of yen)		(In millions of U.S. dollars)
Assets:
Cash and due from banks	¥	359	$	4
Due from bank		359		4
Other assets		0		0
Other		0		0
Property, plant and equipment		0		0
Other		0		0
Total assets	¥	360	$	4

5

	March 31, 2011		March 31, 2011
	(In millions of yen)		(In millions of U.S. dollars)
Liabilities:
Other liabilities	¥	1	$	0
Accrued expenses		1		0
Provision for bonuses		4		0
Provision for directors’ bonuses		0		0
Provision for retirement benefits		113		1
Provision for directors’ retirement benefits		0		0
Total liabilities	¥	119	$	1
Net Assets:
Retained earnings	¥	241	$	3
Other retained earnings		241		3
Retained earnings brought forward		241		3
Total shareholders’ equity		241		3
Total net assets	¥	241	$	3
Total liabilities and net assets	¥	360	$	4

6

STATEMENTS OF OPERATIONS

Financial Operations for Facilitating Realignment of United States Forces in Japan (unaudited)

	March 31, 2011		March 31, 2011
	(In millions of yen)		(In millions of U.S. dollars)
Ordinary income:	¥	411	$	5
Receipts from the national budget		411		4
Receipts from general account of the national budget		411		4
Other income		0		0
Other		0		0
Ordinary expenses:		170		2
Fees and commissions payments		22		0
Other fees and commissions		22		0
General and administrative expenses		147		2
Ordinary profit		241		3
Net income	¥	241	$	3

7

STATEMENTS OF CASH FLOWS

Financial Operations for Facilitating Realignment of United States Forces in Japan (unaudited)

	March 31, 2011			March 31, 2011
	(In millions of yen)			(In millions of U.S. dollars)
Cash flow from operating activities
Net income	¥	241		$	3
Depreciation and amortization		0			0
Increase (decrease) in provision for bonuses		4			0
Increase (decrease) in provision for directors’ bonuses		0			0
Increase in provision for retirement benefits		113			1
Increase in provision for directors’ retirement benefits		0			0
Other		1			0
Subtotal		360			4
Net cash provided by operating activities		360			4
Cash flow from investing activities
Purchase of property, plant and equipment		(0	)		(0	)
Net cash used in investing activities		(0	)		(0	)
Cash flow from financing activities
Proceeds from issuance of common stock		—			—
Repayments of lease obligations		—			—
Payment to national treasury		—			—
Net cash provided by (used in) financing activities		—			—
Effect of exchange rate change on cash and cash equivalents		—			—
Net increase in cash and cash equivalents		359			4
Cash and cash equivalents at the beginning of period		—			—
Cash and cash equivalents at the end of period	¥	359		$	4

8

EX-99.6

Exhibit 6

[TRANSLATION]

THE JAPAN FINANCE CORPORATION ACT

(Act No. 57 of 2007)

TABLE OF CONTENTS

Chapter 1:	General Provisions (Articles 1 through 5)
Chapter 2:	Officers and Employees (Articles 6 through 10)
Chapter 3:	Operations (Articles 11 through 27)
Chapter 4:	Finance and Accounting (Articles 28 through 57)
Chapter 5:	Miscellaneous Provisions (Articles 58 through 66)
Chapter 6:	Penal Provisions (Articles 67 through 74)
Supplementary Provisions

CHAPTER 1: GENERAL PROVISIONS

Article 1: Purpose

The Japan Finance Corporation (hereinafter referred to as “JFC”) shall be a Kabushiki-Kaisha, which has the purpose of contributing to the sound development of Japan and the international economy and society and to the improvement of the quality of national life, by taking responsibility for (i) the financial function to provide fund procurement assistance to the general public, small and medium enterprises and those engaged in agriculture, forestry and fishery and (ii) the financial function to promote the overseas development and securement of resources which are important for Japan, to maintain and improve the international competitiveness of Japanese industries and to promote the overseas business having the purpose of preserving the global environment, such as preventing global warming, also providing the financial services that are necessary to take appropriate measures with respect to disruptions to domestic or international financial order or damages caused by large-scale natural disasters, acts of terrorism, medical epidemics, etc., and furthermore enabling financial institutions, such as banks, to provide such necessary financial services in a timely and smooth manner, while having the objective of supplementing the financial transactions implemented by ordinary financial institutions.

Article 2: Definitions

In this Act, the meaning of the terms listed in each of the following Items shall be as prescribed respectively in those Items.

(1) “A Person Engaged in the Life/Health-Related Businesses” means, among the general public prescribed in the preceding Article, those who are engaged in the Life/Health-Related Businesses (which means the business prescribed by a Cabinet Order as the life/health-related businesses; the same shall apply hereinafter) and who are prescribed by a Cabinet Order, such as a life/health trade association (seikatsu-eisei-dogyo-kumiai).

(2) “A Person Engaged in Agriculture, Forestry and Fishery” means the persons engaged in agriculture (including animal husbandry and sericulture industries), forestry, fishery or salt industry (hereinafter referred to as “Agriculture, Forestry and Fishery”) or juridical person organized by the aforementioned persons (including those juridical persons the main members or contributors of which are the aforementioned persons or local governments or a majority of the amount of the basic properties of which have been contributed by the aforementioned persons or local governments, and which have the purpose of improving Agriculture, Forestry and Fishery).

(3) “Small and Medium Enterprises” means those who fall under any of the following Items:

a. Any company whose capital or total amount of contributions does not exceed three hundred million yen (¥300,000,000) (fifty million yen (¥50,000,000) for an enterprise which is principally engaged in a retail or service business, and one hundred million yen (¥100,000,000) for an enterprise which is principally engaged in a wholesale business), and any company and individual whose regular workforce does not exceed three hundred (300) persons (fifty (50) persons for an enterprise which is principally engaged in a retail business, and one hundred (100) persons for an enterprise which is principally engaged in a wholesale or service business), any of which/whom is engaged in a business (hereinafter referred to as the “Small and Medium Enterprise Specific Business”) belonging to the business category prescribed by a Cabinet Order (excluding those which are principally engaged in a business belonging to the business category prescribed by the Cabinet Order provided for in b below);

b. Among the companies whose capital or total amount of contributions do not exceed the amount prescribed by a Cabinet Order for each business category, and the companies and individuals whose regular workforce does not exceed the number of employees prescribed by a Cabinet Order for each business category, any of which/whom is principally engaged in a business belonging to the business category prescribed by such Cabinet Order, those engaged in the Small and Medium Enterprise Specific Business;

c. Any small and medium enterprise, etc., cooperative, agricultural cooperative, federation of agricultural cooperatives, fishery cooperative, forest association, production forest association, federation of forest associations, consumers’ livelihood cooperative and federation of consumers’ livelihood cooperatives, any of which is engaged in the Small and Medium Enterprise Specific Business or two-thirds (2/3) or more of the members of any of which are the persons engaged in the Small and Medium Enterprise Specific Business;

d. Any joint business cooperative, which is engaged in the Small and Medium Enterprise Specific Business;

e. Any commercial and industrial association and federation of commercial and industrial associations, any of which is engaged in the Small and Medium Enterprise Specific Business or the members of any of which are the persons engaged in the Small and Medium Enterprise Specific Business;

- 2 -

f. Any shopping district promotion association and federation of shopping district promotion associations, any of which is engaged in the Small and Medium Enterprise Specific Business or two-thirds (2/3) or more of the members of any of which are the persons engaged in the Small and Medium Enterprise Specific Business;

g. Among the life/health trade associations, life/health trade small associations and federations of life/health trade associations, two-thirds (2/3) or more of the direct or indirect members of any of which are the juridical persons whose capital or total amount of contributions does not exceed fifty million yen (¥50,000,000) (one hundred million yen (¥100,000,000) for an enterprise which is principally engaged in a wholesale business) or the persons whose regular workforce does not exceed fifty (50) persons (one hundred (100) persons for an enterprise which is principally engaged in a wholesale or service business), those which are engaged in the Small and Medium Enterprise Specific Business or whose members are the persons engaged in the Small and Medium Enterprise Specific Business;

h. Any sake brewers association, federation of sake brewers associations or sake brewers central association (chuokai), two-thirds (2/3) or more of the direct or indirect members (engaging in a liquor manufacturing business) of any of which are the juridical persons whose capital or total amount of contributions does not exceed three hundred million yen (¥300,000,000) or the persons whose regular workforce does not exceed three hundred (300) persons, and any liquor merchant association, federation of liquor merchant associations and liquor merchant central association (chuokai), two-thirds (2/3) or more of the direct or indirect members (engaging in a liquor sales business) of any of which are the juridical persons whose capital or total amount of contributions does not exceed fifty million yen (¥50,000,000) (one hundred million yen (¥100,000,000) for a liquor wholesaler) or the persons whose regular workforce does not exceed fifty (50) persons (one hundred (100) persons for a liquor wholesaler); and

i. Any coastal shipping association or federation of coastal shipping associations, two-thirds (2/3) or more of the direct or indirect members (engaging in a coastal shipping business) of any of which are the juridical persons whose capital or total amount of contributions does not exceed three hundred million yen (¥300,000,000) or the persons whose regular workforce does not exceed three hundred (300) employees.

(4) “Specific Funds” means the funds which are necessary to take appropriate measures with respect to disruptions to domestic or international financial order or damages caused by large-scale natural disasters, acts of terrorism, medical epidemics, etc. and which are prescribed by a Cabinet Order.

(5) “Crises Response Operations” means, among the (i) provision of loans of the Specific Funds, (ii) discounting of bills, guaranteeing of liabilities or acceptance of bills in connection with the Specific Funds, (iii) acquisition of corporate bonds issued to procure the Specific Funds by certain measures, such as subscription, or (iv) assumption of all or part of the loan receivables related to the Specific Funds (hereinafter referred to as the “Loans, etc. of Specific Funds”), those provided by receiving the provision of credit (excluding those falling under the operations listed in Article 41, Item (6) hereof) from JFC.

- 3 -

Article 3: Holding of Shares by Government

The Government shall, at all times, hold the total number of outstanding shares of JFC.

Article 4: Government’s Contribution

1. The Government may, when it finds it to be necessary, make contributions to JFC within the amount appropriated in the budget.

2. When a contribution is made by the Government pursuant to the provisions of the preceding Paragraph, JFC shall, notwithstanding the provisions of Article 445, Paragraph 2 of the Companies Act (Act No. 86 of 2005), be allowed not to record the amount exceeding half of such contribution amount as the capital. In this case, “this Act” referenced in Paragraph 1 of the same Article shall be dealt to mean “this Act or the Japan Finance Corporation Act (Act No. 57 of 2007).”

3. When a contribution is made by the Government pursuant to the provisions of Paragraph 1 of this Article, JFC shall, in accordance with the separation of accounting prescribed in Article 41 hereof, allocate the capital or reserve increased as a result of such contribution to each account related to the operations listed in each Item of the same Article.

Article 5: Limitation, etc. on Use of Name

1. No person other than JFC shall use the words “Japan Finance Corporation” in its name.

2. JFC may, notwithstanding the provisions of Article 6, Paragraph 2 of the Banking Act (Act No. 59 of 1981), use the name “Japan Bank for International Cooperation” as the name of the internal organization set forth in Article 13, Paragraph 3 hereof.

3. No person other than JFC shall use the name “Japan Bank for International Cooperation.”

CHAPTER 2: OFFICERS AND EMPLOYEES

Article 6: Resolution for Appointment and Removal, etc. of Officers, etc.

1. The resolution for the appointment and removal of the Officers, etc. (meaning Directors, Executive Officers and Auditor(s); the same shall apply hereinafter) of JFC shall not take effect unless the authorization of the competent Ministers is granted.

2. The resolution for selection and displacement of a Representative Director or Representative Executive Officer of JFC shall not take effect unless the authorization of the competent Ministers is granted.

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Article 7: Provisions on Disqualification for Officer, etc.

No employees (other than persons in part-time employment) of the Government or a local government may be the Officers, etc. of JFC.

Article 8: Prohibition of Concurrent Holding of Positions by Officers, etc.

No Officers, etc. (other than part-time Officers; the same shall apply in this Article) of JFC shall become an officer of any for-profit organization other than JFC or shall engage for his/her own account in any business for profit; provided, however, that this shall not apply when the competent Ministers approve that such concurrent position will not interfere with such Officer’s execution of his/her duties as the Officers, etc. and gives approval.

Article 9: Confidentiality Obligations of Officers, etc., Accounting Advisor and Employees

No Officers, etc., Accounting Advisor (if the Accounting Advisor is a juridical person, a member who should execute its duties) or employees of JFC shall disclose or misappropriate any secret they have learned in the course of their duties. The same shall apply after they leave their offices.

Article 10: Status of Officers, etc., Accounting Advisor and Employees

The Officers, etc., Accounting Advisor (if the Accounting Advisor is a juridical person, a member who should execute its duties) or employees of JFC shall be deemed to be employees engaged in public service in accordance with laws and regulations, in so far as the application of penal provisions such as the Criminal Code (Act No. 45 of 1907) is concerned.

CHAPTER 3: OPERATIONS

Article 11: Scope of Operations

1. JFC shall, for attaining its purpose, engage in the following operations:

(1) Operations of providing monetary loans, to the persons listed in the corresponding middle column of Schedule I hereto, of the funds listed in the rightmost columns of the same Schedule, respectively, (with respect to the operations of providing monetary loans listed in the rightmost column of Item (14) of the same Schedule, including the operations of acquiring corporate bonds newly issued to procure such funds (excluding the short-term corporate bonds set forth in Article 66, Item (1) of the Act on Transfer of Bonds, Shares, etc. (Act No. 75 of 2001); the same shall apply in Article 53 hereof) by certain measures, such as subscription; the same shall apply hereinafter);

(2) Operations listed in Schedule II hereto;

(3) Insurance in accordance with the provisions of the Small and Medium Enterprise Credit Insurance Act (Act No. 264 of 1950);

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(4) Operations listed in Schedule III hereto (limited to those conducted to promote the overseas development and securement of resources which are important for Japan, to maintain and improve the international competitiveness of Japanese industries and to promote the overseas business having the purpose of preserving the global environment, such as preventing global warming, and those related to the measures taken with respect to disruptions to international financial order);

(5) Provision of information to the users of operations provided by JFC that pertains to such operations; and

(6) Any other operations incidental to those listed in each of the preceding Items (with respect to the operations listed in Item (4), excluding those listed in Item (7) of Schedule III hereto).

2. JFC shall, for attaining its purpose, engage in the operations listed below when the competent Ministers recognize that it is difficult for ordinary financial institutions to conduct the Loans, etc. of Specific Funds on usual conditions, and that it is necessary for a person designated by the competent Ministers (hereinafter referred to as the “Designated Financial Institution”) to provide the Crisis Response Operations:

(1) Loan to the Designated Financial Institution of funds necessary for the Loans, etc. of Specific Funds;

(2) In the case of the default of all or part of debts related to the Loans, etc. of Specific Funds conducted by the Designated Financial Institution, compensation to the Designated Financial Institution as creditor for the portion of the defaulted amount; and

(3) Any other operations incidental to those listed in each of the preceding two (2) Items.

3. In addition to those set forth in the preceding two (2) Paragraphs, JFC may, for attaining its purpose, engage in the operations of the provision of interest subsidies to the Designated Financial Institution and any other operations incidental thereto, with respect to the Loans, etc. of Specific Funds conducted by such Designated Financial Institution that relates to the operations listed in Item (1) or (2) of the preceding Paragraph.

Article 12: Practice of Domestic Financial Operations

1. JFC shall, at the time of the commencement of business, decide on the practice of (i) operations listed in Paragraph 1, Items (1) through (3) of the preceding Article and the operation of providing information to the users of such operations pursuant to the provisions of Item (5) of the same Paragraph and (ii) the operations incidental to (i) above pursuant to the provisions of Item (6) of the same Paragraph (hereinafter referred to as the “Domestic Financial Operations”), and shall obtain the authorization of the competent Ministers. The same shall apply when it is intended to make any changes thereto.

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2. Matters to be decided in relation to the practice of the Domestic Financial Operations set forth in the preceding Paragraph shall be the matters prescribed by the competent Ministry Ordinance, in addition to loan interest rate, redemption period (a period of deferment shall be included therein; the same shall apply hereinafter) and period of deferment specified by JFC in accordance with the provisions of the following Paragraph and Paragraph 4 below.

3. The loan interest rate, redemption period and period of deferment of the funds listed in the rightmost columns of Item (8) (limited to the portions of the amount related to a., d., h. through l., n. through p. and s. through u. in the rightmost columns of the same Item) and Items (9) through (13) of Schedule I hereto (with respect to the funds listed in a., d., h., o., t. and u. in the rightmost columns of Item (8) of the same Schedule, excluding those listed in the columns for the type of loans in Schedule V hereto) shall be within the scope as provided for in Schedule IV hereto.

4. With respect to the funds listed in the columns for the type of loans in Schedule V hereto as the funds necessary to ensure the planned implementation of the structural improvement of the forestry industry or to promote (i) the improvement of agricultural management, (ii) the improvement of forestry management, (iii) the improvement of fishery management or maintenance of fishing operation or (iv) the development of Agriculture, Forestry and Fishery in developing mountain villages or depopulated area, the loan interest rate shall be the interest rates listed in the same Schedule, respectively, and the redemption period and period of deferment shall be within the scope of redemption period and period of deferment listed in the same Schedule, respectively.

Article 13: Practice of the Japan Bank for International Cooperation Operation

1. The loan of funds, the acquisition by assignment of loan receivables, the acquisition of the Corporate/Public Bonds, etc. (meaning the corporate/public bonds, etc. defined in Note (3) of Schedule III hereto; the same shall apply in this Paragraph, Article 31, Paragraph 3, Article 50, Paragraph 6 and Article 73, Item (5) hereof), the Guarantee, etc. of Liabilities (meaning the guarantee, etc. of liabilities set forth in Note (2) of the same Schedule; the same shall apply in Article 50, Paragraph 6 and Article 73, Item (5) hereof) or the provision of contributions pursuant to the provisions of Article 11, Paragraph 1, Item (4) hereof may be conducted only when the repayment of the funds so loaned, the collection of loan receivables so acquired, the redemption of Corporate/Public Bonds, etc. so acquired, the performance of the liabilities so guaranteed, etc. or the realization of profits that enable the payment of dividends resulting from business so contributed is recognized as being certain.

2. The conditions, such as the interest rates of loans and yield on assigned loan receivables related to the operations listed in Items (1) through (6) of Schedule III hereto, shall be determined in to the light of usual conditions for transactions by the Banks, etc. (meaning the banks set forth in the Banking Act, long-term credit banks set forth in the Long-Term Credit Bank Act (Act No. 187 of 1952) and other financial institutions prescribed by a Cabinet Order) or the trends of financial markets, so that revenue for the account with respect to the operations listed in Article 41, Item (6) hereof will be sufficient to cover the expenses therefor.

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3. JFC shall establish a separate internal organization that is to solely and exclusively conduct (i) operations listed in Article 11, Paragraph 1, Item (4) hereof and the operation of providing information to the users of such operations pursuant to the provisions of Item (5) of the same Paragraph and (ii) the operations incidental to (i) above pursuant to the provisions of Item (6) of the same Paragraph.

Article 14: Delegation of Operations

1. JFC may delegate part of its operations (excluding the operations of the loan of funds listed in the rightmost column of Item (15) of Schedule I hereto pursuant to the provisions of Article 11, Paragraph 1, Item (1) and the operations listed in Item (3) of the same Paragraph) to other persons (limited to the financial institutions prescribed by the competent Ministry Ordinance and other juridical persons prescribed by the competent Ministry Ordinance (hereinafter referred to as the “Juridical Person Delegated”)).

2. Notwithstanding the provisions of any other Acts, the Juridical Person Delegated (excluding the juridical persons prescribed by the competent Ministry Ordinance) may accept the delegation of operations that were delegated by JFC pursuant to the provisions of the preceding Paragraph.

3. Any person who is an officer or employee of the Juridical Person Delegated to whom the operations were delegated in accordance with the provisions of Paragraph 1 above and who engages in such delegated operations shall be deemed to be an employee who is engaged in public service in accordance with laws and regulations, in so far as the application of penal provisions, such as the Criminal Code, is concerned.

4. Notwithstanding the provisions of Paragraph 1 above, JFC may delegate to the Okinawa Development Finance Corporation part of its operations listed in Items (1) through (5) of Schedule II hereto pursuant to the provisions of Article 11, Paragraph 1, Item (2) hereof and the operations incidental thereto pursuant to the provisions of Item (6) of the same Paragraph.

Article 15: Executing Policy on Operations to Facilitate Crises Responses

1. JFC shall determine the practice and conditions of the operations set forth in Article 11, Paragraphs 2 and 3 hereof (hereinafter referred to as the “Operations to Facilitate Crises Responses”) and prepare other policies to effectively and efficiently execute the Operations to Facilitate Crises Responses (hereinafter referred to as the “Executing Policy on Operations to Facilitate Crises Responses”), pursuant to the competent Ministry Ordinance.

2. JFC shall obtain the approval of the competent Ministers when it intends to prepare the Executing Policy on Operations to Facilitate Crises Responses. The same shall apply when it is intended to make any changes thereto.

3. When JFC has obtained the approval of the competent Ministers in accordance with the provisions of preceding Paragraph, it shall publish the Executing Policy on Operations to Facilitate Crises Responses, without delay.

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Article 16: Designation

1. The designation pursuant to the provisions of Article 11, Paragraph 2 (referred to as the “Designation” in this Article, Paragraph 1 of the following Article, Article 18, Article 25, Paragraph 3, Article 26 and Article 27 hereof) shall be made upon the application by a person who intends to provide the Crisis Response Operations.

2. Any person who intends to obtain the Designation shall, in accordance with the procedures prescribed by the competent Ministry Ordinance, establish the regulations for the Crisis Response Operations based on the Executing Policy on Operations to Facilitate Crises Responses (hereinafter referred to as the “Regulations for Operations”) and submit the same to the competent Ministers by attaching the same to the application for designation.

3. The Regulations for Operations shall specify the matters prescribed by the competent Ministry Ordinance, such as the matters concerning the implementation system and the implementation method of the Crisis Response Operations and the details of provision of credit facility to be availed through the Operations to Facilitate Crises Responses necessary for the Loans, etc. of Specific Funds.

4. Any person who falls under any of the following Items may not obtain the Designation:

(1) A person who violated the Acts prescribed by a Cabinet Order, such as this Act and the Banking Act, or any disposition under such Acts and who was sentenced to a fine or heavier punishment, and thereafter, five (5) years have not passed since the day on which such person finished serving the sentence or the execution of the sentence ceased;

(2) A person whose Designation was revoked pursuant to the provisions of Article 26, Paragraph 1 hereof and five (5) years have not passed since the day on which the Designation was revoked; or

(3) A person who is a juridical person and any of whose officers who perform its operations falls under any of the following:

a. (x) (i) an adult ward or (ii) person under curatorship or (y) a bankrupt who shall not be granted restoration of rights; or

b. in the case where the Designation of the Designated Financial Institution was revoked pursuant to the provisions of Article 26, Paragraph 1 hereof, a person who had been an officer of such Designated Financial Institution within sixty (60) days prior to the date on which the public notice of the date and place of the hearing on the revocation of such Designation, and five (5) years have not passed since the day on which such Designation was revoked.

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5. The competent Ministers shall not grant the Designation to any applicant unless they find the application set forth in Paragraph 1 above conforms to each of the following Items:

(1) Such applicant is a financial institution prescribed by a Cabinet Order, such as a bank;

(2) The Regulations for Operations conform to the laws and regulations and the Executing Policy on Operations to Facilitate Crises Responses and are sufficient to ensure the appropriate and steady performance of the Operation to Facilitate Crisis Responses; or

(3) In light of the personnel composition, such applicant has knowledge and experience that ensure the appropriate and steady performance of the Crisis Response Operations.

Article 17: Public Notice of Designation

1. When the competent Ministers grant the Designation, the competent Ministers shall give the public notice, in the official gazette, of the Designated Financial Institution’s trade name or name, its address and the location of its place of business or office where the Crisis Response Operations are provided.

2. When the Designated Financial Institution intends to change its trade name or name, its address or the location of its place of business or office where the Crisis Response Operations are provided, the Designated Financial Institution shall make notification of such fact to the competent Ministers in advance.

3. When the notification is made pursuant to the provisions of the preceding Paragraph, the competent Ministers shall give public notice of such fact in the official gazette.

Article 18: Renewal of Designation

1. If the Designation fails to be renewed at regular intervals as prescribed by a Cabinet Order during the period between five (5) years and ten (10) years after the grant of the Designation, the Designation shall become null and void due to the passage of such interval of time.

2. The provisions of Article 16 hereof shall apply mutatis mutandis to the renewal of the Designation.

3. If the Designation becomes null and void pursuant to the provisions of Paragraph 1 above, the competent Ministers shall give the public notice of such fact in the official gazette.

Article 19: Succession

1. In the case where the Designated Financial Institution assigns the business related to the Crisis Response Operations, if an assigner and assignee obtain authorization from the competent Ministers for the assignment and acceptance of assignment, the assignee shall succeed to the status of the Designated Financial Institution.

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2. In the case of the merger of a juridical person who is the Designated Financial Institution (excluding the case where a juridical person that is the Designated Financial Institution merges with a juridical person that is not the Designated Financial Institution and the juridical person that is the Designated Financial Institution survives) or the case of the company split of a juridical person (limited to the case where the business related to the Crisis Response Operations is succeeded) when the authorization of the competent Ministers is obtained with respect to such merger or company split, the juridical person that survives the merger or the juridical person that is incorporated through the merger or the juridical person that succeeded to the business related to such operations through the company split shall succeed to the status of the Designated Financial Institution.

3. The provisions of Article 16 and Article 17, Paragraph 1 hereof shall apply mutatis mutandis to the authorization set forth in the preceding two (2) paragraphs.

Article 20: Authorization, etc. for Changes to Regulations for Operations

1. If the Designated Financial Institutions intend to change the Regulations for Operations, the Designated Financial Institutions shall obtain the authorization of the competent Ministers.

2. If the competent Ministers find that the Regulations for Operations of the Designated Financial Institution have become improper to ensure the appropriate and steady performance of the Crisis Response Operations, the competent Ministers may order the amendment of such Regulations for Operations.

Article 21: Agreement

1. With respect to the Operations to Facilitate Crises Responses, JFC shall execute an agreement (referred to as the “Agreement” in this Article and Articles 28, 45 and 46 of the Supplementary Provisions hereof) that includes the following matters, with the Designated Financial Institution, and shall perform its business in accordance therewith:

(1) The Designated Financial Institution shall provide the Crisis Response Operations as determined by the competent Ministers pursuant to the provisions of Paragraph 1 of the following Article;

(2) If the transactions related to the operation listed in Article 11, Paragraph 2, Item (2) (referred to as the “Specific Transactions” in the following Item) is conducted, the Designated Financial Institution shall pay money as determined by the competent Ministers, while, if the debt related to the Crisis Response Operations by the Designated Financial Institution is defaulted, JFC shall pay money equivalent to the amount obtained by multiplying such defaulted amount by the rate determined by the competent Ministers;

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(3) In the case where the Designated Financial Institution conducts the Specific Transactions with JFC, the Designated Financial Institution shall, even after receiving the payment of money related to such Specific Transactions from JFC, make efforts to collect loan receivables related to such payment;

(4) If the Designated Financial Institution conducts the collection pursuant to the provisions of the preceding Item, it shall pay JFC the amount calculated as determined by the competent Ministers as the portion related to the amount equivalent to the assets acquired through such collection;

(5) The Designated Financial Institution shall prepare reports on its financial conditions and the state of performance of the Crisis Response Operations and submit the same report to JFC, regularly or irregularly; and

(6) In addition to the matters listed in each of the preceding Items, the matters prescribed by the competent Ministry Ordinance, such as the contents and methods of the Crisis Response Operations provided by the Designated Financial Institution and the Operations to Facilitate Crises Responses performed by JFC.

2. When JFC intends to execute the Agreement, it shall obtain the authorization of the competent Ministers. The same shall apply when JFC intends to change such Agreement.

Article 22: Implementation of Operations to Facilitate Crises Responses

1. When the competent Ministers grant a recognition pursuant to the provisions of Article 11, Paragraph 2 hereof, with respect to the Crisis Response Operations by the Designated Financial Institution and the Operations to Facilitate Crises Responses by JFC, both of which are to be recognized, the competent Ministers shall determine the cases to cover, period of implementation and other matters prescribed by the competent Ministry Ordinance as the matters necessary in relation to the implementation of such operations.

2. JFC shall perform the Operations to Facilitate Crises Responses as determined by the competent Ministers pursuant to the provisions of the preceding Paragraph.

3. If the competent Ministers grant a recognition pursuant to the provisions of Article 11, Paragraph 2 hereof, it shall notify such fact and the contents of the determination made pursuant to the provisions of Paragraph 1 above to the Designated Financial Institution and JFC, as well as give public notice in the official gazette.

Article 23: Description in Accounting Books

The Designated Financial Institution shall, with respect to the Crisis Response Operations, keep accounting books, by entering the matters prescribed by the competent Ministry Ordinance therein, and preserve the same, as prescribed in the competent Ministry Ordinance.

Article 24: Order of Supervision

The competent Ministers may issue orders to the Designated Financial Institution that are necessary for the supervision, in relation to the Crisis Response Operations, if they find it necessary for the enforcement of this Act.

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Article 25: Suspension or Abolishment of Operation

1. If the Designated Financial Institution intends to abolish all or part of the Crisis Response Operations or, in the case where the Crisis Response Operations have commenced, if it intends to suspend all or part of such Crisis Response Operations, the Designated Financial Institution shall make notification of such fact to the competent Ministers in advance, as prescribed by the competent Ministry Ordinance.

2. If the notification is made to the competent Ministers pursuant to the provisions of the preceding Paragraph, the competent Ministers shall give public notice of such fact in the official gazette.

3. If the Designated Financial Institution abolishes all of the Crisis Response Operations, the Designation granted to such Designated Financial Institution shall become null and void.

Article 26: Revocation, etc. of Designation

1. If the Designated Financial Institution falls under any of the following Items, the competent Ministers may revoke the Designation or may order the discontinuance of all or part of the Crisis Response Operations, by setting a period of time:

(1) The Designated Financial Institution has become to fall under Article 16, Paragraph 4, Item (1) or (3) hereof;

(2) The Designated Financial Institution proved not to have fallen under any of the Items of Article 16, Paragraph 5 hereof at the time the Designation was granted;

(3) The Designated Financial Institution proved to have obtained the Designation by wrongful means; or

(4) The Designated Financial Institution has violated (i) this Act or any orders under this Act or (ii) any disposition thereunder.

2. If the competent Ministers revoked the Designation or ordered the discontinuance of all or part of the Crisis Response Operations, pursuant to the provisions of the preceding Paragraph, they shall give public notice of such fact in the official gazette.

Article 27: Completion of Operations upon Revocation, etc. of Designation

With respect to the Designated Financial Institution, if the Designation becomes null and void pursuant to the provisions of Article 18, Paragraph 1 and Article 25, Paragraph 3 hereof, or if the Designation is revoked pursuant to the provisions of Paragraph 1 of the preceding Article, the person who was such Designated Financial Institution or a general successor thereto shall nevertheless be deemed to be the Designated Financial Institution, to the extent within the scope of purpose for the completion of the transactions under the contracts for the Crisis Response Operations provided by such Designated Financial Institution.

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CHAPTER 4: FINANCE AND ACCOUNTING

Article 28: Business Year

The business year of JFC shall begin on April 1 of each year and end on March 31 of the following year.

Article 29: Preparation and Submission of Budget

1. JFC shall prepare its budget and submit it to the Minister of Finance through the competent Ministers for each business year.

2. The documents listed below shall be attached to the budget set forth in the preceding Paragraph:

(1) Documents concerning the business plan and financial plan for the then current business year;

(2) The profit and loss statement, balance sheet and list of assets for the business year prior to the preceding business year;

(3) The estimated profit and loss statement and estimated balance sheet for the preceding and then current business years; and

(4) Any other reference materials for such budget.

3. In the business plan and financial plan set forth in Item (1) of the preceding Paragraph, an estimated disbursement for each fund listed in the rightmost columns of Items (1) and (2) of Schedule I hereto and an estimated total disbursement for funds listed in the rightmost columns of Items (3) through (7) of the same Schedule shall be clarified.

4. The procedures for the preparation and submission of the budget set forth in Paragraph 1 of this Article shall be determined by the Minister of Finance.

Article 30:

1. Upon receipt of the budget submitted pursuant to the provisions of Paragraph 1 of the preceding Article, the Minister of Finance shall examine such budget and make any necessary adjustments thereto, and obtain the Cabinet’s decision thereon.

2. After the Cabinet’s decision is made with respect to the budget set forth in Paragraph 1 of the preceding Article pursuant to the provisions of the preceding Paragraph, the Cabinet shall submit such budget to the Diet together with the national budget.

3. The documents listed in each Item of Paragraph 2 of the preceding Article shall be attached to the budget to be submitted to the Diet pursuant to the provisions of the preceding Paragraph.

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Article 31: Form and Contents of Budget

1. The budget of JFC shall consist of the general budget provisions and the budget for revenues and expenditures.

2. The following matters shall be prescribed in the general budget provisions set forth in the preceding Paragraph.

(1) The limitation amount for borrowings from the Government for each of the operations listed in the following Items:

a. (i) The operations of providing loans to the persons listed in the middle columns of Items (1) through (7) of Schedule I hereto pursuant to the provisions of Article 11, Paragraph 1, Item (1) hereof and (ii) the operations listed in Items (1) and (9) of Schedule II hereto pursuant to the provisions of Item (2) of the same Paragraph (with respect to the operations listed in Item (9) of the same Schedule, limited to those operations closely associated with the operations of providing loans of the funds listed in the rightmost columns of Items (1) through (7) of Schedule I hereto or the operations listed in Item (1) of Schedule II hereto) and (iii) the operations of providing information to users of the operations set forth in (i) and (ii) above pursuant to the provisions of Item (5) of the same Paragraph and (iv) the operations incidental to the operations set forth in (i) through (iii) above pursuant to the provisions of Item (6) of the same Paragraph;

b. (i) The operations of providing loans to the persons listed in the middle columns of Items (8) through (13) of Schedule I hereto pursuant to the provisions of Article 11, Paragraph 1, Item (1) hereof and (ii) the operations listed in Items (2) and (9) of Schedule II hereto pursuant to the provisions of Item (2) of the same Paragraph (with respect to the operations listed in Item (9) of the same Schedule, limited to those operations closely associated with the operations of providing loans of the funds listed in the rightmost columns of Items (8) through (13) of Schedule I hereto or the operations listed in Item (2) of Schedule II hereto) and (iii) the operations of providing information to users of the operations set forth in (i) and (ii) above pursuant to the provisions of Item (5) of the same Paragraph and (iv) the operations incidental to the operations set forth in (i) through (iii) above pursuant to the provisions of Item (6) of the same Paragraph;

c. (i) The operations of providing loans to the persons listed in the middle column of Item (14) of Schedule I hereto pursuant to the provisions of Article 11, Paragraph 1, Item (1) hereof and (ii) the operations listed in Items (3) through (9) of Schedule II hereto pursuant to the provisions of Item (2) of the same Paragraph (with respect to the operations listed in Item (9) of the same Schedule, limited to those operations closely associated with the operations of providing loans of the funds listed in the rightmost column of Item (14) of Schedule I hereto or the operations listed in Items (3) through (8) of Schedule II hereto) and (iii) the operations of providing information to users of the operations set forth in (i) and (ii) above pursuant to the provisions of Item (5) of the same Paragraph and (iv) the operations incidental to the operations set forth in (i) through (iii) above pursuant to the provisions of Item (6) of the same Paragraph; and

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d. The Operations to Facilitate Crises Responses.

(2) The limitation amount for the issuance of corporate bonds (excluding the issuance of the corporate bonds, which are made to be delivered, at the request of persons who have lost corporate bonds having been issued in a foreign country, to such persons) for each of the operations listed in a through d of the preceding Item.

(3) The limitation amount for the funds procured through the assignment of beneficiary interests pursuant to the provisions of Article 53, Item (1) hereof and the assignment of the loan receivables, etc. pursuant to the provisions of Item (2) of the same Article, for each of the operations listed in a through c of Item (1) of this Article.

(4) The amount prescribed in each of a through e below for the operations listed in each of a through e below.

a. Loans provided to the person listed in the middle column of Item 15 of Schedule I hereto pursuant to the provisions of Article 11, Paragraph 1, Item (1) hereof: The limitation amount for the disbursement under the loan

b. Transactions conducted as the operations listed in Items (1), (2) and (5) of Schedule II hereto pursuant to the provisions of Article 11, Paragraph 1, Item (2) hereof: The limitation amount for the amount agreed by JFC to pay with respect to the transaction for each of the operations listed in these Items

c. Guarantees conducted as the operations listed in Items (4), (6) and (8-2) of Schedule II hereto pursuant to the provisions of Article 11, Paragraph 1, Item (2) hereof: The limitation amount for the guarantee money

d. Insurance provided pursuant to the provisions of Article 11, Paragraph 1, Item (3) hereof: The limitation amount for the insurance value

e. Compensation provided to the Designated Financial Institution pursuant to the provisions of Article 11, Paragraph 2, Item (2) hereof: The limitation amount for the compensation

(5) Matters necessary for the implementation of the budget other than the matters listed in each of the preceding Items

3. As used in the budget for revenues and expenditures set forth in Paragraph 1 of this Article, the revenues mean interest on loans, interest on the Corporate/Public Bonds, etc., dividends on contributions, debt guarantee fees and other incomes related to asset management, insurance premium income, collections (limited to the operations listed in Article 11, Paragraph 1, Item (3) hereof) and miscellaneous incidental income, and the expenditures mean interest on borrowings, interest on bonds and notes, insurance premium payment, compensation-related payments, interest subsidies, expense of operations, business entrustment fees and incidental expenses.

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4. The budget for revenues and expenditures set forth in Paragraph 1 of this Article shall be separated for each of the operations listed in a through c of Item (1) of Paragraph 2 of this Article and each of Article 41, Items (5) through (7) hereof.

5. Except for the matters prescribed in each of the preceding Paragraph, the form and contents of JFC’s budget shall be determined by the Minister of Finance upon consultation with the competent Ministers.

Article 32: Contingency

JFC may include contingency in its budget to cover deficits in the budget which may arise from unforeseeable causes.

Article 33: Decision on Budget

In obtaining the Diet’s approval of the budget of JFC, the usual procedures for decision of the national budget shall be followed.

Article 34: Notification Concerning Budget

1. When the Diet’s approval of the budget of JFC has been obtained, the Cabinet shall, as approved by the Diet, immediately notify JFC of such fact through the competent Ministers.

2. JFC shall not implement its budget before it receives notification pursuant to the provision of the preceding Paragraph.

3. When notification has been made pursuant to the provisions of Paragraph 1 of this Article, the Minister of Finance shall notify the Board of Audit of Japan of such fact.

Article 35: Supplementary Budget

1. JFC may, if it is necessary to incorporate changes in its budget due to causes that have arisen after the preparation thereof, prepare a supplementary budget and submit it to the Minister of Finance through the competent Ministers, together with the documents (excluding the estimated profit and loss statement and balance sheet for the preceding business year) listed in Items (1), (3) and (4) of Paragraph 2 of Article 29 hereof which have been modified in the course of the preparation of the supplementary budget; provided, however, that a supplementary budget involving additions to the regular budget may be prepared only when it is particularly imperative due to causes arising after the preparation of the regular budget.

2. The provisions of Article 29, Paragraph 4 hereof, Articles 30, 31 and 33 hereof and the preceding Article shall apply mutatis mutandis to the supplementary budget provided for in the preceding Paragraph.

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Article 36: Provisional Budget

1. JFC may, as necessary, prepare a provisional budget related to specific period within a business year and submit it to the Minister of Finance through the competent Ministers, together with the business plan and financial plan for such period and other documents concerning the reference matters relevant to such provisional budget.

2. The provisions of Article 29, Paragraphs 4 hereof and Articles 30, 31, 33 and 34 hereof shall apply mutatis mutandis to the provisional budget provided for in the preceding Paragraph.

3. The provisional budget shall cease to be effective when the Diet’s approval of the regular budget for the relevant business year has been obtained; any expenditure having been made under the provisional budget shall be deemed to have been made out of the regular budget for such relevant business year.

Article 37: Prohibition of Use of Budget Other Than its Purposes

JFC shall not use the expenditure budget other than for the purposes specified for such budget.

Article 38: Appropriation

1. JFC may not, without obtaining the approval of the Minister of Finance, appropriate the amount of expenditures designated in the budget.

2. When JFC intends to obtain an approval for appropriation pursuant to the provisions of the preceding Paragraph, JFC shall obtain the approval through the competent Ministers.

3. When the Minister of Finance has given his/her approval pursuant to the preceding Paragraph, such Minister of Finance shall immediately notify the Board of Audit of Japan of such fact.

Article 39: Use of Contingency

1. When JFC makes use of contingency, it shall immediately notify the Minister of Finance of such fact through the competent Ministers.

2. Upon receipt of the notification pursuant to the provisions of the preceding Paragraph, the Minister of Finance shall immediately notify the Board of Audit of Japan of such fact.

Article 40: Submission of Financial Statements

1. JFC shall prepare the list of assets every business year.

2. JFC shall, within three (3) months after the end of every business year, submit to the Minister of Finance through the competent Ministers the balance sheets, statements of operations and list of assets (hereinafter referred to as the “Balance Sheets, etc.”) and business report (including the Electro-Magnetic Record (which means the record determined by the Minister of Finance as a record which is produced by electronic, magnetic, or any other means unrecognizable by natural personal perceptive function and which is used for data-processing by a computer; the same shall apply in Article 44, Paragraph 1 hereof) which has recorded the matters to be described in such Balance Sheets, etc. and such business report) for each business year.

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Article 41: Separation of Accounting

JFC shall separate the accounting for each category of operations listed below and allocate it by establishing the respective account for each category:

(1) (i) The operations of providing loans to the persons listed in the middle columns of Items (1) through (7) of Schedule I hereto pursuant to the provisions of Article 11, Paragraph 1, Item (1) hereof and (ii) the operations listed in Items (1) and (9) of Schedule II hereto pursuant to the provisions of Item (2) of the same Paragraph (with respect to the operations listed in Item (9) of the same Schedule, limited to those operations closely associated with the operations of providing loans of the funds listed in the rightmost columns of Items (1) through (7) of Schedule I hereto or the operations listed in Item (1) of Schedule II hereto) and (iii) the operations of providing information to users of the operations set forth in (i) and (ii) above pursuant to the provisions of Item (5) of the same Paragraph and (iv) the operations incidental to the operations set forth in (i) through (iii) above pursuant to the provisions of Item (6) of the same Paragraph;

(2) (i) The operations of providing loans to the persons listed in the middle columns of Items (8) through (13) of Schedule I hereto pursuant to the provisions of Article 11, Paragraph 1, Item (1) hereof and (ii) the operations listed in Items (2) and (9) of Schedule II hereto pursuant to the provisions of Item (2) of the same Paragraph (with respect to the operations listed in Item (9) of the same Schedule, limited to those operations closely associated with the operations of providing loans of the funds listed in the rightmost columns of Items (8) through (13) of Schedule I hereto or the operations listed in Item (2) of Schedule II hereto) and (iii) the operations of providing information to users of the operations set forth in (i) and (ii) above pursuant to the provisions of Item (5) of the same Paragraph and (iv) the operations incidental to the operations set forth in (i) through (iii) above pursuant to the provisions of Item (6) of the same Paragraph;

(3) (i) The operations of providing loans to the persons listed in the middle column of Item (14) of Schedule I hereto pursuant to the provisions of Article 11, Paragraph 1, Item (1) hereof, (ii) the operations listed in Items (4), (6), (8-2) through (9) of Schedule II hereto pursuant to the provisions of Item (2) of the same Paragraph (with respect to the operations listed in Item (9) of the same Schedule, limited to those operations closely associated with the operations of providing loans of the funds listed in the rightmost column of Item (14) of Schedule I hereto or the operations listed in Items (4), (6), (8-2) or (8-3) of Schedule II hereto) and (iii) the operations of providing information to users of the operations set forth in (i) and (ii) above pursuant to the provisions of Item (5) of the same Paragraph and (iv) the operations incidental to the operations set forth in (i) through (iii) above pursuant to the provisions of Item (6) of the same Paragraph;

(4) (i) The operations listed in Items (3), (5), (7), (8) and (9) of Schedule II hereto pursuant to the provisions of Article 11, Paragraph 1, Item (2) hereof (with respect to the operations listed in Item (9) of the same Schedule, limited to those operations closely associated with the operations listed in Items (3), (5), (7) and (8) of the same Schedule) and (ii) the operations of providing information to users of the operations set forth in (i) above pursuant to the provisions of Item (5) of the same Paragraph and (iii) the operations incidental to the operations set forth in (i) and (ii) above pursuant to the provisions of Item (6) of the same Paragraph;

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(5) (i) The operations of providing loans to the persons listed in the middle column of Items (15) of Schedule I hereto pursuant to the provisions of Article 11, Paragraph 1, Item (1) hereof and (ii) the operations listed in Item (3) of the same Paragraph and (iii) the operations of providing information to users of the operations set forth in (i) and (ii) above pursuant to the provisions of Item (5) of the same Paragraph and (iv) the operations incidental to the operations set forth in (i) through (iii) above pursuant to the provisions of Item (6) of the same Paragraph (hereinafter referred to as the “Operations for Credit Insurance, etc.”);

(6) (i) The operations listed in Article 11, Paragraph 1, Item (4) hereof and (ii) the operations of providing information to users of such operations set forth in (i) above pursuant to the provisions of Item (5) of the same Paragraph and (iii) the operations incidental to the operations set forth in (i) and (ii) above pursuant to the provisions of Item (6) of the same Paragraph; and

(7) The Operations to Facilitate Crises Responses.

Article 42: Mutatis Mutandis Application, etc. of Companies Act Related to Separation of Accounting

1. The provisions of Articles 295, 337, 374, 396, 431 through 443, 446 and 447 of the Companies Act shall apply mutatis mutandis to the accounting conducted by JFC by making the separation pursuant to the provisions of the preceding Article. In this case, “this Act” referenced in Article 295, Paragraph 2 of the Companies Act shall be deemed to be replaced with “this Act or the Japan Finance Corporation Act”; “the amount of the surplus of a Stock Company” and “the sum of the amounts listed in Items 5 through 7 from the sum of the amounts listed in Items 1 through 4” referenced in Article 446 of the Companies Act shall be deemed to be replaced, respectively, with “the amount of the surpluses belonging to the accounts established pursuant to the provisions of Article 41 of the Japan Finance Corporation Act” and “the sum of the amounts that are listed in Items 5 through 7 and are recorded in the accounts belonging to such surpluses from the sum of the amounts that are listed in Items 1 through 4 and are recorded in the accounts belonging to such surpluses (with respect to the surpluses belonging to the account related to the operations listed in Item 1 of the same Article, the amount obtained by totaling (i) the sum of the amounts that are listed in Items 5 through 7 thereof and are recorded in the accounts belonging to such surpluses and (ii) the amount of a special reserve for managerial improvement funds belonging to the account prescribed in Article 42, Paragraph 4 of the same Act as of the end of the final business year)”; “the stated capital” referenced in Article 447, Paragraphs 1 and 2 of the Companies Act shall be deemed to be replaced with “stated capital belonging to the accounts established pursuant to the provisions of Article 41 of the Japan Finance Corporation Act”; “is to be appropriated to Reserves” and “and (the amount to be appropriated to) Reserves” referenced in Paragraph 1, Item (2) of the same Article shall be deemed to be replaced, respectively, with “is to be appropriated to Reserves belonging to the accounts established pursuant to the provisions of the same Article” and “and (the amount to be appropriated to) such Reserves”; and “stated capital in (concurrently with)” and “stated capital” referenced in Paragraph 3 of the same Article shall be deemed to be replaced, respectively, with “stated capital belonging to the accounts established pursuant to the provisions of Article 41 of the Japan Finance Corporation Act in (concurrently with)” and “stated capital belonging to the accounts established pursuant to the provisions of the same Article (after/before).” Other necessary technical replacements shall be prescribed by a Cabinet Order.

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2. The provisions of Articles 448 and 449 of the Companies Act and the provisions of Paragraph 1 (limited to the part related to Item 5 thereof) and Paragraph 2 (limited to the part related to Item 5 thereof) of Article 828 of the Companies Act shall apply mutatis mutandis to the accounting conducted by JFC through making the separation pursuant to the provisions of the preceding Article, except for the cases where the accumulation of reserves is made pursuant to the provisions of Article 47, Paragraph 1 hereof and the drawing down of reserves is made pursuant to the provisions of Paragraph 2 of the same Article. In this case, “Reserves” referenced in Article 448, Paragraphs 1 and 2 of the Companies Act shall be deemed to be replaced with “Reserves belonging to the accounts established pursuant to the provisions of Article 41 of the Japan Finance Corporation Act”; “is to be appropriated to the stated capital” and “and (the amount to be appropriated to) the stated capital” referenced in Paragraph 1, Item (2) of the same Article shall be deemed to be replaced, respectively, with “is to be appropriated to the stated capital belonging to the accounts established pursuant to the provisions of the same Article” and “and (the amount to be appropriated to) such stated capital”; and “Reserves in (concurrently with)” and “Reserves (after/before)” referenced in Paragraph 3 of the same Article shall be replaced, respectively, with “Reserves belonging to the accounts established pursuant to the provisions of Article 41 of the Japan Finance Corporation Act in (concurrently with)” and “Reserves belonging to the accounts established pursuant to the provisions of the same Article (after/before).” Other necessary technical replacements shall be prescribed by a Cabinet Order.

3. The amount of JFC’s capital at the time when JFC has increased or decreased the amount of capital belonging to the accounts established pursuant to the provisions of the preceding Article shall be the total amount of capital belonging to all of its accounts after such increase or decrease is made. The amount of JFC’s reserves at the time when JFC has increased or decreased the amount of reserves belonging to the accounts established pursuant to the provisions of the same Article shall be the total amount of reserves belonging to all of its accounts after such increase or decrease is made. In this case, the provisions of Articles 447 through 449 of the Companies Act and Paragraph 1 (limited to the part related to Item (5) thereof) and Paragraph 2 (limited to the part related to Item (5) thereof) of Article 828 of the Companies Act shall not be applicable.

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4. The amount of JFC’s Special Reserve for Managerial Improvement Funds (which means JFC’s special reserve for managerial improvement funds prescribed in Article 6, Paragraph 2 of the Supplementary Provisions hereof) at the time when JFC has increased or decreased the amount of the Special Reserve for Managerial Improvement Funds belonging to the account related to the operations listed in Item (1) of the preceding Article (which means the special reserve for managerial improvement funds established at the account related to the operations listed in the same Item pursuant to the provisions of Article 6, Paragraph 1 of the Supplementary Provisions hereof; the same shall apply in Paragraphs 1, 2 and 5 of the following Article and Article 47, Paragraph 6 hereof) shall be the amount of the Special Reserve for Managerial Improvement Funds belonging to such account after such increase or decrease is made.

5. When applying the provisions of Article 446 of the Companies Act to JFC, “the total amount of the amounts listed in Items (5) through (7)” referenced in the same Article shall be treated as meaning “the amount obtained by totaling (i) the total amount of the amounts listed in Items (5) through (7) and (ii) the amount of JFC’s Special Reserve for Managerial Improvement Funds set forth in Article 42, Paragraph 4 of the Japan Finance Corporation Act (Act No. 57 of 2007) on the last day of the final business year.”

Article 43: Decrease in Amount of Special Reserve for Managerial Improvement Funds

1. When the amount of reserves (excluding the Special Reserve for Managerial Improvement Funds) belonging to the account related to the operations listed in Article 41, Item (1) hereof becomes zero, JFC may decrease the amount of the Special Reserve for Managerial Improvement Funds. In this case, the following matters shall be determined through a resolution of an annual shareholders meeting of JFC:

(1) The amount of the Special Reserve for Managerial Improvement Funds to be decreased; and

(2) The date on which the decrease in the amount of the Special Reserve for Managerial Improvement Funds becomes effective.

2. The amount set forth in Item (1) of the preceding Paragraph shall not exceed the amount of the Special Reserve for Managerial Improvement Funds on the date set forth in Item (2) of the same Paragraph.

3. A resolution of an annual shareholders meeting, which has been adopted pursuant to the provisions of Paragraph 1 of this Article, shall not become effective unless authorization by the competent Ministers.

4. When the competent Ministers intend to give their authorization pursuant to the provisions of the preceding Paragraph, such competent Ministers shall obtain the Minister of Economy, Trade and Industry’s consent in advance.

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5. The provisions of Article 449 of the Companies Act (excluding Paragraph 6, Item (1) thereof) shall apply mutatis mutandis to a decrease in the amount of the Special Reserve for Managerial Improvement Funds, which is made pursuant to the provisions of Paragraph 1 of this Article. In this case, “its stated capital or Reserves (hereinafter in this article referred to as the “Stated Capitals, Etc.”),” “If (a Stock Company) reduces (excluding cases where the whole of the amount by which the Reserves are reduced is appropriated to the stated capital),” “the Capitals, Etc.,” “only the amount of Reserves,” “each item of Paragraph 1 of the preceding article,” “Item 1, Paragraph 1 of the preceding article,” and “the applicable Ordinance of the Ministry of Justice” referenced in Article 449, Paragraph 1 of the Companies Act shall be deemed to be replaced, respectively, with “the Special Reserve for Managerial Improvement Funds (which means the special reserve for managerial improvement funds belonging to the account set forth in Article 42, Paragraph 4 of the Japan Finance Corporation Act; the same shall apply in this Article),” “If (a Stock Company) reduces,” “the Special Reserve for Managerial Improvement Funds,” “the amount of the Special Reserve for Managerial Improvement Funds (is reduced) pursuant to the provisions of Article 43, Paragraph 1 of the same Act,” “each item of Article 43, Paragraph 1 of the Japan Finance Corporation Act,” “Article 43, Paragraph 1, Item 1 of the Japan Finance Corporation Act,” and “the applicable Ordinance of the competent Ministry”; “Capitals, Etc.” referenced in Paragraphs 2, 4 and 5 of Article 449 of the Companies Act shall be deemed to be replaced with “the Special Reserve for Managerial Improvement Funds under the provisions of Article 43, Paragraph 1 of the Japan Finance Corporation Act”; and “Reserves” and “day under Item 3, Paragraph 1 of the preceding article” referenced in Article 449, Paragraph 6 of the Companies Act shall be deemed to be replaced, respectively, with “the Special Reserve for Managerial Improvement Funds under the provisions of Article 43, Paragraph 1 of the Japan Finance Corporation Act” and “the day under Item 2 of the same Paragraph.” Other necessary technical replacements shall be prescribed by a Cabinet Order.

Article 44: Preparation and Submission of Report on Settlement of Accounts

1. After submitting the Balance Sheets, etc. pursuant to the provisions of Article 40, Paragraph 2 hereof, JFC shall, every business year, prepare a report on the settlement of accounts for the relevant business year (including the Electro-Magnetic Record which has recorded the matters to be described in such report on the settlement of accounts; the same shall apply in Articles 44 through 46 hereof) in accordance with the separation of the budget, and submit it to the Minister of Finance through the competent Ministers, without delay, by attaching the opinion of the Auditor(s) or Audit Committee concerning such report on the settlement of accounts, together with such submitted Balance Sheets, etc..

2. Upon receiving the report on the settlement of accounts pursuant to the provisions of the preceding Paragraph, the Minister of Finance shall send it to the Cabinet, together with the Balance Sheets, etc. referenced in the same Paragraph.

3. Upon making the submission pursuant to the provisions of Paragraph 1 of this Article, JFC shall, without delay, keep the report on the settlement of accounts and the document stating the opinion of the Auditor(s) or Audit Committee at its head office and branch offices and make them available for public inspection during the period prescribed by a Ministry of Finance Ordinance.

4. The form and content of the report on the settlement of accounts shall be determined by the Minister of Finance.

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Article 45: Sending of Report on Settlement of Accounts to Board of Audit of Japan

Upon receiving JFC’s report on the settlement of accounts pursuant to the provisions of Paragraph 2 of the preceding Article, the Cabinet shall send it, together with the Balance Sheets, etc. set forth in Paragraph 1 of the same Article, to the Board of Audit of Japan no later than November 30 of the following business year.

Article 46: Submission of Report on Settlement of Accounts to Diet

The Cabinet shall submit JFC’s report on the settlement of accounts for which the Board of Audit of Japan has finished its inspection, to the Diet, by attaching the Balance Sheets, etc. set forth in Article 44, Paragraph 1 hereof, together with the settlement of accounts for national revenues and expenditures.

Article 47: Payment to National Treasury

1. In the event that the amount of the surplus recorded in the settlement of accounts for each business year exceeds zero in each account related to the operations listed in each Item of Article 41 hereof, JFC shall accumulate, as a reserve, the amount calculated in accordance with the standards prescribed by a Cabinet Order, among such surplus, until it reaches the amount prescribed by the Cabinet Order, and if there is still a surplus, JFC shall pay the amount of such surplus into the National Treasury within three (3) months after the end of such business year.

2. In the event that the amount of the surplus recorded in the settlement of accounts for each business year falls below zero in each account set forth in the preceding Paragraph, JFC shall allocate such surplus by drawing down the reserve set forth in the preceding Paragraph until the amount of such surplus becomes zero.

3. The method of disposition of the surplus belonging to the account related to the Operations for Credit Insurance, etc., which disposition is made by JFC by decreasing the amount of capital or reserves belonging to such account allocated pursuant to the provisions of Article 4, Paragraph 3 hereof and Article 5, Paragraph 1 of the Supplementary Provisions hereof, in the case where the amount of such surplus falls below zero shall be prescribed by a Cabinet Order.

4. The procedures for the payment into the National Treasury pursuant to the provisions of Paragraph 1 of this Article, the account into which such payment is to be made and other necessary matters concerning the payment to National Treasury shall be prescribed by a Cabinet Order.

5. The reserve referred to in Paragraph 1 of this Article shall be allocated to each account related to the operations listed in each Item of Article 41 hereof.

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6. In the event that any amount calculated by the method prescribed by the competent Ministry Ordinance as the amount of profits belonging to the account related to the operations listed in Article 41, Item (1) hereof arises in each business year subsequent to the business year including the date on which the amount of the Special Reserve for Managerial Improvement Funds is decreased pursuant to the provisions of Article 43, Paragraph 1 hereof, JFC shall increase, with an amount equivalent to such calculated amount, the amount of the Special Reserve for Managerial Improvement Funds until it reaches to the amount allocated to the Special Reserve for Managerial Improvement Funds pursuant to the provisions of Article 6, Paragraph 1 of the Supplementary Provisions hereof.

7. JFC shall not be allowed to make any disposition of its surplus, such as dividend of its surplus, or make any disposition of the surplus belonging to each account related to the operations listed in each Item of Article 41 hereof, such as the dividend of its surplus, unless such disposition is made pursuant to the provisions of Paragraphs 1, 2 and 6 of this Article.

Article 48: Provision of Loans by Government

1. The Government may provide monetary loans to JFC.

2. If, among the monetary loans provided pursuant to the provisions of the preceding Paragraph, the loan is provided in order to meet JFC’s fund requirements for the performance of the Domestic Financial Operations and the Operations to Facilitate Crises Responses, the Government may exempt JFC from paying interest on such loan or impose the terms which are more favorable to JFC than normal terms.

Article 49: Borrowings and Corporate Bonds for Domestic Financial Operations, etc.

1. Borrowings of funds made in order to meet JFC’s fund requirements for the performance of the Domestic Financial Operations (excluding the Operations for Credit Insurance, etc.; the same shall apply in Paragraph 5 of this Article) and the Operations to Facilitate Crises Responses shall be limited to the borrowings of the “Specific Short-Term Loans” or the borrowings related to the monetary loans obtained pursuant to the provisions of Paragraph 1 of the preceding Article.

2. The term “Specific Short-Term Loans” set forth in the preceding Paragraph means the short-term loans obtained from financial institutions, such as banks, prescribed by the competent Ministry Ordinance within the scope of the amount obtained by deducting the amount listed in Item (2) below from the amount listed in Item (1) below in order to meet JFC’s fund requirements for the performance of the operations listed in a through d of Item (1) of Paragraph 2 of Article 31 hereof.

(1) The amount equivalent to the total amount of (i) the limitation amount of borrowings from the Government for each of the operations listed in a through d of Item (1) of Paragraph 2 of Article 31 hereof as prescribed by the provisions of the same Item and (ii) the limitation amount of issuance of bonds for each of the operations listed in a through d of Item (1) of the same Paragraph as prescribed by the provisions of Item (2) of the same Paragraph.

(2) The amount equivalent to the total amount of (i) the amount of borrowings which have already been provided in order to meet fund requirements for the performance of the operations listed in a through d of Item (1) of Paragraph 2 of Article 31 hereof and (ii) the amount of corporate bonds already issued.

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3. Borrowings of funds made in order to meet JFC’s fund requirements for the performance of the Operations for Credit Insurance, etc. shall be limited to the borrowings of short-term loans obtained from financial institutions, such as banks, prescribed by the competent Ministry Ordinance within the scope of the total amount of the capital and reserves belonging to the accounts related to the Operations for Credit Insurance, etc.

4. JFC shall not be allowed to issue any corporate bonds in order to meet fund requirements for the performance of the Operations for Credit Insurance, etc.

5. When JFC intends to make the borrowing related to the monetary loans from the Government as set forth in Paragraph 1 of this Article or issue corporate bonds in order to meet fund requirements for the performance of the Domestic Financial Operations and the Operations to Facilitate Crises Responses, JFC shall obtain the authorization of the competent Ministers.

Article 50: Borrowings and Corporate Bonds for Operations of the Japan Bank for International Cooperation

1. Borrowings of funds made in order to meet JFC’s fund requirements for the performance of the operations listed in Article 41, Item (6) hereof shall be limited to the borrowings of short-term loans from financial institutions, such as banks, or the borrowings related to the monetary loans obtained from the Government pursuant to the provisions of Article 48, Paragraph 1 hereof.

2. Pursuant to the provisions of a Cabinet Order, JFC shall, every business year, prepare a basic policy concerning the issuance of corporate bonds made in order to meet fund requirements for the performance of the operations listed in Article 41, Item (6) hereof and obtain the authorization of the competent Minister. When JFC intends to make any change to the policy, the same shall apply.

3. When JFC has issued corporate bonds pursuant to the provisions of preceding Paragraph, it shall, without delay, make a notification of such fact to the competent Minister pursuant to the provisions prescribed by a Cabinet Order.

4. The total amount of (i) the outstanding amounts of the short-term loans and the borrowings related to the monetary loans obtained from the Government as set forth in Paragraph 1 of this Article and (ii) the outstanding amount of liabilities relating to the principal amount of corporate bonds set forth in Paragraph 2 of this Article shall not exceed the amount (referred to as the “Limitation Amount” in Paragraphs 5 and 6 of this Article) equivalent to ten (10) times the total amount of the capital and reserves, belonging to the account related to the operations listed in Article 41, Item (6) hereof.

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5. Notwithstanding the provisions of the preceding Paragraph, when the issuance of new bonds is necessary to reborrow the issued corporate bonds with respect to corporate bonds set forth in Paragraph 2 of this Article, the corporate bonds may be issued in excess of the Limitation Amount only within the period necessary to make such reborrowing.

6. The total amount of the outstanding amounts of (i) monetary loans, (ii) acquisition of the receivables related to assignment and the Corporate/Public Bonds, etc., (iii) liabilities relating to the Guarantee, etc. of Liabilities and (iv) contributions, all of which are made pursuant to the provisions of Article 11, Paragraph 1, Item (4) hereof, shall not exceed the aggregate amount of (x) the total amount of the capital and reserves belonging to the account related to the operations listed in Article 41, Item (6) hereof and (y) the Limitation Amount.

Article 51: Allocation of Funds Procured Through Borrowing or Issuance of Corporate Bonds, Reborrowing, and Loss of Corporate Bond Certificates

1. The funds procured by JFC through the borrowings of funds or issuance of corporate bonds pursuant to the provisions of the preceding two (2) Articles shall be allocated to each account related to the operations listed in each Item of Article 41 hereof, in accordance with the separation of accounting set forth in the same Article.

2. The Specific Short-Term Loans set forth in Article 49, Paragraph 2 hereof and short-term loans set forth in Paragraph 3 of the same Article and Paragraph 1 of the preceding Article shall be repaid during the business year in which these borrowings are made; provided, however, that in cases where repayment cannot be made due to shortage of funds, JFC may reborrow only the amount which cannot be so repaid, with the authorization of the competent Ministers.

3. Loans reborrowed pursuant to the proviso of the preceding Paragraph shall be repaid within one (1) year.

4. The provisions of Article 49, Paragraph 5 hereof and Paragraph 3 of the preceding Article shall not apply if JFC issues the certificates of corporate bonds, as prescribed by a Cabinet Order, in order to deliver to anyone who has lost such certificates of corporate bonds and, as a result of the issuance of such certificates of corporate bonds, JFC assumes new liabilities

Article 52: Statutory Lien

1. A holder of JFC’s corporate bonds shall, with respect to the property of JFC, have the right to have his/her receivables satisfied in preference to other creditors.

2. The order of the statutory lien set forth in the preceding Paragraph shall be next to the general liens prescribed by the provisions of the Civil Code (Act No. 89 of 1896).

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Article 53: Placement into Trust and Assignment of Loan Receivables and Corporate Bonds for Purpose of Procurement of Funds

1. JFC shall obtain the authorization of the competent Ministers if it intends to conduct the following acts in order to meet fund requirements for the performance of (i) the operations listed in Article 11, Paragraph 1, Item (1) hereof and the operations listed in Item (2) of the same Paragraph and (ii) the operations of providing information to users of the operations set forth in (i) above pursuant to the provisions of Item (5) of the same Paragraph and (iii) the operations incidental to the operations set forth in (i) and (ii) above pursuant to the provisions of Item (6) of the same Paragraph.

(1) To cause part of the loan receivables and corporate bonds (including the Specific Loan Receivables for Small and Medium Enterprises assigned as the operations listed in Item (3) of Schedule II hereof pursuant to the provisions of Article 11, Paragraph 1, Item (2) hereof (which mean the Specific Loan Receivables for Small and Medium Enterprises set forth in Note (8) of the same Schedule; the same shall apply in each Item of Paragraph 6 of Article 63 hereof) and the Specific Corporate Bonds for Small and Medium Enterprises obtained as the said operations (which Bonds mean the Specific Corporate Bonds for Small and Medium Enterprises set forth in Note (9) of the same Schedule; the same shall apply in Article 63, Paragraph 5 hereof); the said Specific Loan Receivables for Small and Medium Enterprises and the Specific Corporate Bonds for Small and Medium Enterprises are hereinafter referred to as the “Loan Receivables, etc.” in the following Item and Paragraph 1 of the following Article) to be placed into the Specific Trust (which means the Specific Trust set forth in Note (12) of Schedule II hereof; the same shall apply in Article 63, Paragraph 6, Item (1) hereof), and to assign all or part of the beneficiary interests of such Specific Trust.

(2) To assign part of the Loan Receivables, etc. to the Specific Purpose Company, etc. (which means the Specific Purpose Company, etc. set forth in Note (10) of Schedule II hereof); and

(3) To conduct an act incidental to the acts listed in the preceding two (2) Items.

Article 54: Acceptance of Operations from Trustees, etc.

1. If, upon obtaining the authorization pursuant to the provisions of the preceding Article, JFC places the Loan Receivables, etc. into trusts in a manner listed in Article 3, Item (1) of the Trust Act (Act No. 108 of 2006) (limited to those established in the manner of executing a trust agreement set forth in the same Item with the Trust Company, etc. (which means the Trust Company, etc. set forth in Note (11) of Schedule II hereto)) or assigns the Loan Receivables, etc., JFC shall be delegated with all the operations regarding the collection of the principal and interest and other collections related to such Loan Receivables, etc. from the trustees of such trusts or the assignees of such Loan Receivables, etc.

2. JFC may delegate part of the operations delegated pursuant to the provisions of the preceding Paragraph to the following persons:

(1) The Juridical Person Delegated; and

(2) The Okinawa Development Finance Corporation.

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3. The provisions of Article 14, Paragraphs 2 and 3 hereof shall apply mutatis mutandis to the case where JFC delegates part of the operations delegated pursuant to the provisions of the preceding Paragraph to the person listed in Item (1) of the same Paragraph.

Article 55: Government Guarantee

1. Notwithstanding the provisions of Article 3 of the Act Concerning Restriction on Financial Support by the Government to Juridical Persons (Act No. 24 of 1946), the Government may execute a guarantee agreement with respect to the liabilities related to JFC’s corporate bonds (excluding the liabilities with respect to which the Government may execute a guarantee agreement under Article 2, Paragraph 2 of the Act Concerning Special Measures with Respect to Acceptance of Foreign Capital from the International Bank for Reconstruction and Development, etc. (Act No. 51 of 1953) (hereinafter referred to as the “Foreign Capital Acceptance Act”) ) within the scope of the amount fixed by the budget.

2. Among the amount fixed by the budget set forth in the preceding Paragraph, the amount of liabilities related to the corporate bonds issued in a foreign country and denominated in Japanese currency may be fixed by adding up to the amount fixed by the budget as set forth in Article 2, Paragraph 2 of the Foreign Capital Acceptance Act, when it is difficult to fix the said amount of liabilities separately from the said amount fixed by the budget set forth in the same paragraph of the Foreign Capital Acceptance Act.

3. The Government may, in addition to the provisions of Paragraph 1 of this Article, execute a guarantee agreement with respect to the liabilities related to the certificates of corporate bonds or coupons thereof, which are issued by JFC, pursuant to the provisions prescribed by a Cabinet Order, in order to deliver to a person who has lost the certificates of corporate bonds or coupons thereof.

Article 56: Investment of Surplus Funds

JFC shall not invest any surplus funds of its business except by means of:

(1) Acquisition of the Government bonds, local government bonds or Government-guaranteed bonds (which mean the bonds for which the redemption of its principal and payment of interest thereon are guaranteed by the Government) and other securities designated by the competent Ministers;

(2) Deposit with the Fiscal Loan Fund;

(3) Deposit with banks or other financial institutions designated by the competent Ministers;

(4) Holding of negotiable deposit certificates;

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(5) Money trust to the financial institutions engaging in trust business (which mean the financial institutions that have obtained the authorization set forth in Article 1, Paragraph 1 of the Act Concerning the Trust Business by Financial Organizations, as a Side Business, etc. (Act No. 43 of 1943);

(6) Lending of call funds; or

(7) Means prescribed in the competent Ministry Ordinance as the means equivalent to the means set forth in each of the preceding Items.

Article 57: Delegation to Competent Ministry Ordinance

In addition to those provided for in this Act and Cabinet Orders thereunder, the matters necessary with respect to the finance and accounting of JFC shall be prescribed by the competent Ministry Ordinance.

CHAPTER 5: MISCELLANEOUS PROVISIONS

Article 58: Supervision

1. The competent Ministers shall supervise JFC in accordance with the provisions of this Act or the Small and Medium Enterprise Credit Insurance Act.

2. With respect to the management or administration of JFC, in the case where the competent Ministers find that there is a violation of laws and regulations or the Articles of Incorporation or any grossly unjust matter exists and in other cases where they find it necessary for the enforcement of this Act or the Small and Medium Enterprise Credit Insurance Act, the competent Ministers may issue JFC orders concerning its operations as are necessary for the supervision.

Article 59: Report and Inspection

1. If the competent Ministers find it necessary for the enforcement of this Act or the Small and Medium Enterprise Credit Insurance Act, the competent Ministers may cause JFC or the Juridical Person Delegated (including those juridical persons delegated pursuant to the provisions of Article 14, Paragraph 4 hereof or Article 54, Paragraph 2 hereof; the same shall apply in this Paragraph and Article 71 hereof) to submit reports or may cause their officials to enter the facilities of JFC or of the Juridical Person Delegated, such as the offices to inspect the accounting books, documents and other necessary objects; provided, however, that, with respect to the Juridical Person Delegated, such action shall be limited to the scope of operations delegated to it by JFC.

2. If the competent Ministers find it necessary for the enforcement of this Act, the competent Ministers may cause the Designated Financial Institution to submit reports on the Crisis Response Operations, or cause their officials to enter the place of business or the offices of the Designated Financial Institution to inspect the accounting books, documents and other necessary items.

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3. When an officials of the competent Ministers carry out an on-site inspection pursuant to the provisions of the preceding two (2) paragraphs, he/she shall carry with him/her identification certifying his/her status and present it to parties concerned.

4. The authority to carry out the on-site inspection pursuant to the provisions of Paragraphs 1 and 2 above shall not be construed to be that given for the investigation of a criminal offense.

Article 60: Delegation of Authority

1. The competent Ministers may, as prescribed by a Cabinet Order, delegate part of the authority to carry out an on-site inspection pursuant to the provisions of Paragraph 1 or 2 of the preceding Article to the Prime Minister.

2. If the Prime Minister has carried out an on-site inspection pursuant to the provisions of Paragraph 1 or 2 of the preceding Article on the basis of the delegation pursuant to the provisions of the preceding Paragraph, he/she shall promptly submit a report of the results of the inspection to the competent Ministers.

3. The Prime Minister shall delegate both the authority delegated pursuant to the provisions of Paragraph 1 above and the authority set forth in the provisions of the preceding Paragraph to the Commissioner of Financial Services Agency.

4. The Commissioner of Financial Services Agency may, as prescribed by a Cabinet Order, delegate all or part of the authority delegated pursuant to the provisions of the preceding Paragraph, to Director-General of the Local Finance Bureau or the Director-General of the Local Finance Branch Bureau.

5. Part of the authority of the competent Ministers set forth in this Act (excluding that delegated to the Prime Minister pursuant to the provisions of Paragraph 1 above) may, as prescribed by a Cabinet Order, be delegated to any Director of the Local Branch Office.

Article 61: Articles of Incorporation

1. In the Articles of Incorporation of JFC, in addition to the matters listed in each of the Items of Article 27 of the Companies Act, matters relating to the procedures and requirements for the appointment of a person to assume management responsibility from among the Representative Directors or Representative Executive Officers shall be described or recorded.

2. With respect to the matters related to the requirements for the appointment of a person to assume management responsibility set forth in the preceding Paragraph, the provisions that the requirements listed below be satisfied shall be incorporated:

(1) A person who has discernment and the capability recognized as necessary in light of the purposes set forth in Article 1 hereof and the operations set forth in Article 11 hereof shall be appointed; and

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(2) Due consideration shall be required in order to avoid automatically appointing such persons who have held certain specific governmental positions.

3. The resolution for the amendment of the Articles of Incorporation of JFC shall not take effect unless the authorization of the competent Ministers is granted.

Article 62: Merger, Company Split, Share Exchange, Assignment and Acquisition by Assignment of Business and Dissolution

Notwithstanding the provisions of Part II, Chapters VII and VIII and Part V, Chapters II, III and IV, Section I of The Companies Act, the merger, company split, share exchange, assignment and acquisition by assignment of all or part of business, to which JFC becomes a party, and dissolution of JFC shall be provided for separately by an Act.

Article 63: Exclusion from Application, etc. of Financial Instruments and Exchange Act, etc.

1. When JFC performs the actions listed in each of the Items of Article 2, Paragraph 8 of the Financial Instruments and Exchange Act (Act No. 25 of 1948) pursuant to the provisions of Article 11, Paragraph 1 or 2 or Article 53 hereof, the provisions of Article 29 of the same Act shall not apply.

2. In the case set forth in the preceding Paragraph, JFC shall be deemed as the financial instruments firms defined in Article 2, Paragraph 9 of the Financial Instruments and Exchange Act, and the provisions set forth in each of the relevant Items shall apply according to the classification of cases listed in each of the following Items:

(1) Where the operations listed in Article 41, Item (6) hereof are performed: The provisions of Chapter III, Section I, Subsection V and Section II (excluding Article 35, Article 35-2, Articles 36-2 through 36-4, Article 37, Paragraph 1, Item (2), Article 37-3, Paragraph 1, Item (2) and Article 37-7) of the Financial Instruments and Exchange Act (including the penal provisions relating to such provisions); and

(2) Where the operations set forth in Article 11, Paragraph 1 hereof and the actions listed in each of the Items of Article 53 hereof (excluding those falling under the cases listed in the preceding Item) are performed: The provisions of Chapter III, Section I, Subsection V and Section II, Subsection I (excluding Article 35, Article 35-2, Articles 36-2 through 36-4, Article 37, Paragraph 1, Item (2), Article 37-3, Paragraph 1, Item (2), Article 37-7 and Article 38-2), Subsection V and Subsection VI of the Financial Instruments and Exchange Act (including the penal provisions relating to such provisions).

3. When JFC performs the actions listed in each of the Items of Article 63, Paragraph 1 of the Financial Instruments and Exchange Act pursuant to the provisions of Article 11, Paragraph 1 hereof, the provisions of Paragraph 2 of the said Article 63 shall not apply.

4. In the case set forth in the preceding Paragraph, JFC shall be deemed as the financial instruments firms defined in Article 2, Paragraph 9 of the Financial Instruments and Exchange Act, and the provisions of Article 38 (limited to the portions relating to Item (1)) and Article 39 of the same Act (including the penal provisions related to such provisions) shall apply.

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5. With respect to the application of the Financial Instruments and Exchange Act in the case where JFC performs the operations listed in Item (3) of Schedule II hereto (limited to the operation of performing the acquisition the Specific Small and Medium Enterprise Corporate Bonds from the Specific Financial Institutions, etc. for Small and Medium Enterprises (which mean the specific financial institutions, etc. for small and medium enterprises defined in Note (7) of the same Schedule)), the actions performed by such Specific Financial Institutions, etc. for Small and Medium Enterprises shall be deemed to fall under the handling of private placement of securities set forth in Article 2, Paragraph 8, Item (9) of the same Act.

6. In the cases listed in each of the items below, the respective provisions set forth in such Items shall not apply:

(1) Where JFC acquires the Specific Loan Receivables for Small and Medium Enterprises by assignment from the money lender defined in Article 2, Paragraph 2 of the Money Lending Business Act (Act No. 32 of 1983) (hereinafter referred to as the “Money Lenders”) as prescribed by the competent Ministry Ordinance, and makes a specific trust (excluding the trust to, among the foreign trust managers defined in Article 2, Paragraph 5 of the Trust Business Act (Act No. 154 of 2004), persons other than the foreign trust companies defined in Paragraph 6 of the same Article) of such the Specific Loan Receivables for Small and Medium Enterprises: The provisions of Article 24 of the Money Lending Business Act; and

(2) Where JFC guarantees part of the debt related to the Specific Loan Receivables for Small and Medium Enterprises (limited to that related to the loan made by the Money Lenders) as prescribed by the competent Ministry Ordinance: The provisions of Article 16-2, Paragraph 3, Article 17, Paragraphs 3 through 5, Article 24-2 and Article 24-6-10, Paragraph 2 (excluding the portions relating to the persons delegated with the money lending operations from the Money Lenders) and Paragraph 4 (excluding the portions relating to the persons delegated with the money lending operations from the Money Lenders) of the Money Lending Business Act.

Article 64: Competent Ministers

1. The competent Ministers under this Act shall be as prescribed by each of the relevant Items below according to the separation of matters listed therein:

(1) Matters concerning (i) officers and employees and (ii) other administrative operations: The Minister of Finance, the Minister of Agriculture, Forestry and Fisheries and the Minister of Economy, Trade and Industry;

(2) Matters concerning (i) the operations of providing loans to the persons listed in the middle columns of Items (1) and (2) of Schedule I hereto pursuant to the provisions of Article 11, Paragraph 1, Item (1) hereof and (ii) the operations listed in Items (1) and (9) of Schedule II hereto pursuant to the provisions of Item (2) of the same Paragraph (limited to the operations closely associated with (x) the operations related to the persons listed in the middle columns of Items (1) and (2) of Schedule I hereto with respect to the operations listed in Item (1) of Schedule II hereto and (y) the operations of providing loans of the funds listed in the rightmost columns of Items (1) and (2) of Schedule I hereto or the operations listed in Item (1) of Schedule II hereto related to the persons listed in the middle columns of Items (1) and (2) of Schedule I hereto with respect to the operations listed in Item (9) of Schedule II hereto) and (iii) the operations of providing information to the users of the operations set forth in (i) above pursuant to the provisions of Item (5) of the same Paragraph and (iv) the operations incidental to the operations set forth in (i) and (iii) above pursuant to the provisions of Item (6) of the same Paragraph and (v) finance and accounting related to the operations set forth in (i) through (iv) above: The Minister of Finance;

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(3) Matters concerning (i) the operations of providing loans to the persons listed in the middle columns of Items (3) through (7) of Schedule I hereto pursuant to the provisions of Article 11, Paragraph 1, Item (1) hereof and (ii) the operations listed in Items (1) and (9) of Schedule II hereto pursuant to the provisions of Item (2) of the same Paragraph (limited to the operations closely associated with the operations related to (x) the operations related to the persons listed in the middle columns of Items (3) through (7) of Schedule I hereto with respect to the operations listed in Item (1) of Schedule II hereto and (y) the operations of providing loans of the funds listed in the rightmost columns of Items (3) through (7) of Schedule I hereto or the operations listed in Item (1) of Schedule II hereto related to the persons listed in the middle columns of Items (3) through (7) of Schedule I hereto with respect to the operations listed in Item (9) of Schedule II hereto) and (iii) the operations of providing information to the users of the operations set forth in (i) above pursuant to the provisions of Item (5) of the same Paragraph and (iv) the operations incidental to the operations set forth in (i) and (iii) above pursuant to the provisions of Item (6) of the same Paragraph and (v) finance and accounting related to the operations set forth in (i) through (iv) above: The Minister of Finance and The Minister of Health, Labour and Welfare;

(4) Matters concerning (i) the operations of providing loans to the persons listed in the middle columns of Items (8) through (13) of Schedule I hereto pursuant to the provisions of Article 11, Paragraph 1, Item (1) hereof and (ii) the operations listed in Items (2) and (9) of Schedule II hereto pursuant to the provisions of Item (2) of the same Paragraph (with respect to the operations listed in Item (9) of Schedule II hereto, limited to the operations closely associated with the operations related to (x) the operations of providing loans of the funds listed in the rightmost columns of Items (8) through (13) of Schedule I hereto or (y) the operations listed in Item (2) of Schedule II hereto) and (iii) the operations providing information to the users of the operations set forth in (i) above pursuant to the provisions of Item (5) of the same Paragraph and (iv) the operations incidental to the operations set forth in (i) and (iii) above pursuant to the provisions of Item (6) of the same Paragraph and (v) finance and accounting related to the operations set forth in (i) through (iv) above: The Minister of Agriculture, Forestry and Fisheries and the Minister of Finance;

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(5) Matters concerning (i) the operations of providing loans to the persons listed in the middle columns of Items (14) and (15) of Schedule I hereto pursuant to the provisions of Article 11, Paragraph 1, Item (1) hereof, (ii) the operations listed in Items (3) through (9) of Schedule II hereto pursuant to the provisions of Item (2) of the same Paragraph (with respect to the operations listed in Items (9) of Schedule II hereto, limited to the operations closely associated with (x) the operations of providing loans of the funds listed in the rightmost columns of Item (14) of Schedule I hereto or (y) the operations listed in Items (3) through (8-3) of Schedule II hereto) and the operations listed in Item (3) of the same Paragraph and (iii) the operations of providing information to the users of the operations set forth in (i) and (ii) above pursuant to the provisions of Item (5) of the same Paragraph and (iv) the operations incidental to the operations set forth in (i) and (iii) above pursuant to the provisions of Item (6) of the same Paragraph and (v) finance and accounting related to the operations set forth in (i) through (iv) above: The Minister of Economy, Trade and Industry and the Minister of Finance;

(6) Matters concerning (i) the operations listed in Article 11, Paragraph 1, Item 4 hereof and (ii) the operations of providing information to the users of such operations pursuant to the provisions of Item (5) of the same Paragraph and (iii) the operations incidental to the operations set forth in (i) and (ii) above pursuant to the provisions of Item (6) of the same Paragraph and (iv) finance and accounting related to the operations set forth in (i) and (iii) above: The Minister of Finance; and

(7) Matters concerning the Operations to Facilitate Crises Responses and finance and accounting related to such operations: The Minister of Finance, the Minister of Agriculture, Forestry and Fisheries and the Minister of Economy, Trade and Industry.

2. In this Act, the competent Ministry Ordinance shall be the orders issued by the competent Ministers.

Article 65: Consultation

In the following cases, the competent Ministers shall consult with the Minister of Health, Labour and Welfare in advance:

(1) When they intend to grant authorization pursuant to the provisions of Article 6 hereof;

(2) When they intend to give approval pursuant to the proviso to Article 8 hereof; and

(3) When they intend to grant authorization pursuant to the provisions of Article 61, Paragraph 3 hereof.

Article 66: Notice to the Prime Minister, etc.

1. When the competent Ministers have taken any disposition listed below, they shall promptly give notice of such fact to the Ministers prescribed by a Cabinet Order, such as the Prime Minister.

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(1) The Designation pursuant to the provisions of Article 11, Paragraph 2 hereof (including the renewal of the Designation set forth in Article 18, Paragraph 1 hereof);

(2) Authorization pursuant to Article 19, Paragraphs 1 and 2 and Article 20, Paragraph 1 hereof;

(3) Order pursuant to the provisions of Article 20, Paragraph 2, Article 24 and Article 26, Paragraph 1 hereof; and

(4) Revocation of the Designation pursuant to the provisions of Article 26, Paragraph 1 hereof.

2. When the competent Ministers have accepted the notification pursuant to the provisions of Article 25, Paragraph 1 hereof, they shall promptly give notice of such fact to the other Ministers prescribed by a Cabinet Order, such as Prime Minister.

CHAPTER 6: PENAL PROVISIONS

Article 67: Penal Provisions

When a person has violated an order for suspension of the Crises Response Operations issued pursuant to the provisions of Article 26, Paragraph 1 hereof, the offender shall be liable to punishment by imprisonment not exceeding two (2) years or a fine not exceeding three million yen (¥3,000,000), or by cumulative imposition of such imprisonment and such fine.

Article 68:

A person who falls under any of the following Items shall be liable to punishment by imprisonment not exceeding one (1) year or a fine not exceeding three million yen (¥3,000,000), or by cumulative imposition of such imprisonment and such fine:

(1) When he/she has failed to keep accounting books or make entries in accounting books or has made any false statement in accounting books, or has failed to store accounting books, in violation of the provisions of Article 23 hereof;

(2) When he/she has violated an order issued pursuant to the provisions of Article 24 hereof; or

(3) When he/she has failed to submit reports pursuant to the provisions of Article 59, Paragraph 2 hereof or submitted a false report on the matters to be reported pursuant to the provisions of the same Paragraph, or refused, obstructed or evaded an inspection to be carried out pursuant to the provisions of the same Paragraph.

Article 69:

Any person who has disclosed or misappropriated any secret in violation of the provisions of Article 9 hereof shall be liable to punishment by imprisonment not exceeding one (1) year or a fine not exceeding five hundred thousand yen (¥500,000).

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Article 70:

When a person has failed to make a notification pursuant to the provisions of Article 25, Paragraph 1 hereof or has made a false notification on the matters to be notified pursuant to the provisions of the same Paragraph, the offender shall be liable to punishment by a fine not exceeding three hundred thousand yen (¥300,000).

Article 71:

A Director, Executive Officer, Accounting Advisor (if the Accounting Advisor is a juridical person, the member who should execute the duties of such accounting advisor), Auditor or employee of JFC, or an officer or employee of the Juridical Person Delegated who has failed to submit reports pursuant to the provisions of Article 59, Paragraph 1 hereof or submitted false reports on the matters to be reported pursuant to the provisions of the same Paragraph, or refused, obstructed or evaded an inspection to be carried out pursuant to the provisions of the same Paragraph shall be liable to punishment by a fine not exceeding three hundred thousand yen (¥300,000).

Article 72:

When an employee of a juridical person, such as a representative, agent or worker of the juridical person, has committed an act of violation of the provisions listed in the following Items with regard to the business of such juridical person, not only the offender shall be punished but also such juridical person shall be punished by the fine prescribed in the relevant Item.

(1) Article 67 hereof: Punishment of a fine not exceeding three hundred million yen (¥300,000,000)

(2) Article 68, Item (1) or (3) hereof: Punishment of a fine not exceeding two hundred million yen (¥200,000,000)

(3) Article 68, Item (2) hereof or Article 70 hereof: Punishment of the fine set forth in each of the said relevant Articles.

Article 73:

A Director, Executive Officer, Accounting Advisor or the member who should execute the duties of such Accounting Advisor, or Auditor of JFC who falls under any of the following Items shall be liable to punishment by a non-penal fine not exceeding one million yen (¥1,000,000):

(1) When he/she has failed to obtain the authorization or approval of the competent Ministers in the case where such authorization or approval is required by the provisions of this Act;

(2) When he/she has failed to make a notification to the competent Ministers in the case where such notification is required by the provisions of this Act;

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(3) When he/she has conducted any operations other than those set forth in Article 11 hereof;

(4) When he/she has issued corporate bonds in violation of the provisions of Article 49, Paragraph 4 hereof;

(5) When he/she has borrowed funds or issued corporate bonds in violation of the provisions of Article 50, Paragraph 4 hereof, or he/she has provided monetary loans, acquired loan receivables by assignment, acquired the Corporate/Public Bonds, etc., provided the Guarantee, etc. of Liabilities or made contributions in violation of the provisions of Paragraph 6 of the same Article;

(6) When he/she has invested the surplus funds having arisen in the course of the conduct of operations in violation of the provisions of Article 56 hereof; or

(7) When he/she has violated an order of the competent Ministers issued pursuant to the provisions of Article 58, Paragraph 2 hereof.

Article 74:

Any person who has violated the provisions of Article 5, Paragraph 1 or 3 hereof shall be liable to punishment by a non-penal fine not exceeding one hundred thousand yen (¥100,000).

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SUPPLEMENTARY PROVISIONS

Article 1: Effective Date

This Act shall come into force as of the date of its promulgation; provided, however, that the provisions listed in each of the following Items shall come into force as of the day prescribed in the relevant Item.

(1) The provisions of Paragraphs 1 through 5 of Article 63 hereof: The effective date of the Act for Partial Amendment of the Securities and Exchange Act, etc. (Act No. 65 of 2006) or the effective date of this Act, whichever comes later.

(2) The provisions of Article 63, Paragraph 6 hereof: The effective date of the Act for Partial Amendment of the Act, etc. Concerning Regulations, etc. of Money Lending Business (Act No. 115 of 2006) or the effective date of this Act, whichever comes later.

(3) The provisions of Article 45 of the Supplementary Provisions hereof: The date of promulgation of the Act for Kabushiki Kaisha Central Cooperative Bank for Commerce and Industry (Shoko Chukin Bank) (Act No. 74 of 2007) or the effective date of this Act, whichever comes later.

(4) The provisions of Article 46 of Supplementary Provisions hereof: The effective date of the Act for Kabushiki Kaisha Development Bank of Japan (Act No. 85 of 2007) or the effective date of this Act, whichever comes later.

(5) The provisions of Article 5, Paragraph 3 hereof and the provisions of Articles 42 through 44 of the Supplementary Provisions hereof: October 1, 2008.

Article 2: Provisions for Coordination

If the effective date of the Trust Act comes after the effective date of this Act, when applying the provisions of Article 54, Paragraph 1 hereof and Note (12) of Schedule II hereto during the period commencing on the effective date of this Act and ending on the day immediately preceding the effective date of the Trust Act, “places the Loan Receivables, etc. into trusts in a manner listed in Article 3, Item (1) of the Trust Act (Act No. 108 of 2006) (limited to those established in a manner of executing a trust agreement set forth in the same Item with the Trust Company, etc. (which means the Trust Company, etc. set forth in Note (11) of Schedule II hereto))” referenced in the same Paragraph shall be treated as meaning “entrusts the Loan Receivables, etc. to the Trust Company, etc. (which means the Trust Company, etc. set forth in Note (11) of Schedule II hereto)”; “the trust established by the methods listed in Article 3, Item (1) of the Trust Act (limited to those established in a manner of executing a trust agreement set forth in the same Item with the Trust Company, etc.), the trust established by the methods listed in Item (3) of the same Article” referenced in Note (12) of the same Schedule shall be treated as meaning “the trust established with the Trust Company, etc.”

Article 3: Organizing Members

1. The competent Ministers shall appoint the Organizing Members and cause them to perform the duties of incorporators with respect to the incorporation of JFC.

2. When the competent Ministers intend to appoint the Organizing Members pursuant to the provisions of the preceding Paragraph, they shall consult with the Minister of Health, Labour and Welfare in advance.

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Article 4: Articles of Incorporation

1. The Organizing Members shall prepare the Articles of Incorporation of JFC and obtain the authorization of the competent Ministers.

2. When the competent Ministers intend to grant the authorization set forth in the preceding Paragraph, the competent Ministers shall consult with the Minister of Health, Labour and Welfare and the Minister of Defense in advance.

Article 5: Shares Issued upon Incorporation of JFC

1. The matters listed below concerning the shares issued upon the incorporation of JFC and the total number of shares that JFC may issue shall be prescribed in its Articles of Incorporation. In this case, the matters listed in Item (3) below shall, in accordance with the separation of accounting prescribed in Article 41 hereof and Article 18 of the Act on Special Measures Concerning Smooth Implementation of Realignment of United States forces in Japan (Act No. 67 of 2007) prior to revision (hereinafter referred to as the “Former Force Realignment Special Measures Act”) by the provisions of Article 54 of the Act Concerning Adjustment of Relevant Acts as a Consequence of the Japan Finance Corporation Act (Act No. 58 of 2007) (such Article 54 excluding the revising provisions prescribed in Article 1, Item 2 of the Supplementary Provisions of the same Act), be allocated for each account related to the operations listed in each Item of Article 41 hereof and the Financial Operations for Facilitating Realignment of United States forces in Japan (which means the Financial Operations for Facilitating Realignment of United States forces in Japan that are prescribed in Article 16, Paragraph 1 of the Former Force Realignment Special Measures Act; the same shall apply hereinafter):

(1) The number of shares (if JFC intends to incorporate JFC as a company with class shares, the classes of such shares and the number of shares for each of such classes);

(2) Amount to be paid in for Shares (which means the amount of money to be paid in exchange for one (1) share or property (other than money) delivered in exchange therefor); and

(3) The matters concerning the amount of capital, capital reserve and JFC’s Special Reserve for Managerial Improvement Funds set forth in Paragraph 2 of the following Article.

2. With respect to the shares issued upon the incorporation of JFC, notwithstanding the provisions of Article 445, Paragraph 2 of the Companies Act, the amount exceeding the half of the amount of the property contributed by the National Life Finance Corporation, Agriculture, Forestry and Fisheries Finance Corporation, Japan Finance Corporation for Small and Medium Enterprise and Japan Bank for International Cooperation (hereinafter referred to as “NLFC, etc.”) pursuant to the provisions of Article 8 of the Supplementary Provisions hereof upon the issuance of such shares shall be allowed not to be recorded as the capital. In this case, “this Act” referenced in Article 445, Paragraph 1 of the same Act shall be treated as meaning “this Act or the Japan Finance Corporation Act (Act No. 57 of 2007).”

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Article 6: Special Reserve for Managerial Improvement Funds

1. JFC shall, upon its incorporation, establish the Special Reserve for Managerial Improvement Funds in the account related to the operations listed in Article 41, Item (1) hereof and allocate the amount prescribed by a Cabinet Order from the capital reserve belonging to such account to such Special Reserve for Managerial Improvement Funds, in order to ensure the smooth operation and management of the operations related to the loan, which is provided pursuant to the provisions of Article 11, Paragraph 1, Item (1) hereof, of the funds prescribed by a Cabinet Order as those provided to assist with the improvement and development of the management of small businesses among the funds listed in the rightmost column of Item (1) of Schedule I hereto.

2. The Special Reserve for Managerial Improvement Funds established with the account related to the operations listed in Article 41, Item (1) hereof pursuant to the provisions of the preceding Paragraph shall be JFC’s Special Reserve for Managerial Improvement Funds.

Article 7: Subscription for Shares

1. The total number of shares issued upon the incorporation of shares shall be subscribed for by NLFC, etc., and the Organizing Members shall allocate such total number of shares to NLFC, etc.

2. The Government shall exercise the right of share subscribers concerning the incorporation of JFC through the shares allocated pursuant to the provisions of the preceding Paragraph.

Article 8: Contribution

Each of NLFC, etc. shall, upon the incorporation of JFC, contribute to JFC the properties (excluding the assets succeeded by the Government pursuant to the provisions of Article 15, Paragraph 2 of the Supplementary Provisions hereof, Article 16, Paragraph 2 thereof, Article 17, Paragraph 2 thereof and Article 18, Paragraph 2 thereof) equivalent to the amount of the contribution which has actually been contributed by the Government to NLFC, etc. on the day immediately preceding the date of dissolution of NLFC, etc. ((i) The said amount of contribution shall, with respect to the National Life Finance Corporation, be the amount obtained by adding, to such amount of contribution, the amount deemed to have been contributed by the Government pursuant to the provisions of Article 14 of the Supplementary Provisions hereof, and (ii) the said amount of contribution shall, with respect to the Japan Bank for International Cooperation, be the amount of the contribution related to the International Financial Operations set forth in Article 23, Paragraph 1 of the Japan Bank for International Cooperation Act prior to revision (Act No. 35 of 1999; hereinafter referred to as the “JBIC Act Prior to Revision”) by the Act Concerning Partial Amendment of the Act of the Incorporated Administrative Agency - Japan International Cooperation Agency (Act No. 100 of 2006).

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Article 9: Organizational Meeting

When applying the provisions of Article 65, Paragraph 1 of the Companies Act, which are related to the incorporation of JFC, “ on and after either the date under Item 3 of Article 58(1) or the last day of the period under such Item, whichever comes later” referenced in the same Paragraph shall be treated as meaning “after the allotment of shares made pursuant to the provisions of Article 7, Paragraph 1 of the Supplementary Provisions of the Japan Finance Corporation Act (Act No. 57 of 2007)”.

Article 10: Establishment of JFC

The delivery of properties related to the contribution made by NLFI, etc. pursuant to the provisions of Article 8 of the Supplementary Provisions hereof shall be made at the time of the enforcement of the provisions of Article 42 of the Supplementary Provisions hereof and, notwithstanding the provisions of Article 49 of the Companies Act, JFC shall be established at that time.

Article 11: Registration of Incorporation

JFC shall, notwithstanding the provisions of Article 911, Paragraph 1 of the Companies Act, register its incorporation without delay after the establishment of JFC.

Article 12: Transfer to Government Without Compensation

1. JFC’s shares acquired by NLFC, etc. through making contributions shall, upon the establishment of JFC, be transferred to the Government without compensation.

2. JFC’s shares to be transferred to the Government without compensation pursuant to the provisions of the preceding Paragraph shall, as prescribed by a Cabinet Order, belong to the general account or the special account for fiscal investments and loan programs.

Article 13: Exclusion from Application of Companies Act

The provisions of Article 30 of the Companies Act and Part II, Chapter I, Section 3 thereof shall not apply to the incorporation of JFC.

Article 14: Dissolution, etc. of the National Life Finance Corporation

The amount prescribed by a Cabinet Order among the Government’s interest-free monetary loans provided pursuant to the provisions of Article 22-2, Paragraphs 2 and 3 of the National Life Finance Corporation Act prior to the abolishment made pursuant to the provisions of Article 42 of the Supplementary Provisions hereof (Act No. 49 of 1949; hereinafter referred to as the “Former National Life Finance Corporation Act”) shall be deemed to have been repaid at the time of the enforcement of the provisions listed in Article 1, Item 5 of the Supplementary Provisions hereof, and the amount equivalent to the amount of the Government’s interest-free monetary loans deemed to have been repaid shall, at that time, be deemed to have been contributed to the National Life Finance Corporation out of the Government’s general account.

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Article 15:

1. The National Life Finance Corporation shall be dissolved at the time of the establishment of JFC, and all the rights and obligations of the National Life Finance Corporation shall be succeeded by JFC at that time, except for the assets succeeded by the Government pursuant to the provisions of the following Paragraph.

2. Among the rights which the National Life Finance Corporation actually has upon the establishment of JFC, the assets recognized as unnecessary for JFC to smoothly perform operations in the future shall be succeeded by the Government upon the establishment of JFC.

3. The scope of assets succeeded by the Government pursuant to the provisions of the preceding Paragraph and other matters necessary for the succession of such assets to the Government shall be prescribed by a Cabinet Order.

4. The business year of the National Life Finance Corporation commencing on April 1, 2008 shall end on the day immediately preceding the date of the dissolution of the National Life Finance Corporation.

5. The preparation, etc. of (i) the settlement of accounts for the business year of the National Life Finance Corporation commencing on April 1, 2008 and (ii) the profit and loss statement, balance sheet and list of assets for the same business year shall be made by JFC through the application of the provisions heretofore in force, except for the parts related to Article 18, Paragraph 1 (limited to the part related to the opinion of Auditors) and Article 19, Paragraph 1 (limited to the part related to the opinion of Auditors) of the Act Concerning Budget and Settlement of Accounts of the Public Finance Corporation (Act No. 99 of 1951) as prescribed in Article 21 of the Former National Life Finance Corporation Act. In this case, when applying the provisions of the Act Concerning Budget and Settlement of Accounts of the Public Finance Corporation as prescribed in Article 21 of the Former National Life Finance Corporation Act, “settlement of accounts for every business year by May 31 of the following year” referenced in Article 17 of the same Act shall be treated as meaning “settlement of accounts for the business year commencing on April 1, 2008 by November 30, 2008,” and “November 30 of the following year” referenced in Article 20 of the same Act shall be treated as meaning “November 30, 2009.”

6. In the case that any profits arise in the calculation of profits and losses pursuant to the provisions of Article 22 of the Former National Life Finance Corporation Act, which provisions are related to the business year of the National Life Finance Corporation commencing on April 1, 2008, the payment to the national treasury shall be made by JFC through the application of the provisions heretofore in force. In this case, “every business year” and “May 31 of the following business year” referenced in Paragraph 1 of the same Article shall be treated as meaning “the business year commencing on April 1, 2008” and “November 30, 2008,” respectively, and “the year preceding the fiscal year including the day prescribed in the same Paragraph” referenced in Paragraph 2 of the same Article shall be treated as meaning “Fiscal Year 2008.”

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7. Registration of the dissolution if the National Life Finance Corporation has been dissolved pursuant to the provisions of Paragraph 1 of this Article shall be prescribed by a Cabinet Order.

Article 16: Dissolution, etc. of the Agriculture, Forestry and Fisheries Finance Corporation

1. The Agriculture, Forestry and Fisheries Finance Corporation shall be dissolved at the time of the establishment of JFC, and all the rights and obligations of the Agriculture, Forestry and Fisheries Finance Corporation shall be succeeded by JFC at that time, except for the assets succeeded by the Government pursuant to the provisions of the following Paragraph.

2. Among the rights which the Agriculture, Forestry and Fisheries Finance Corporation actually has upon the establishment of JFC, the assets recognized as unnecessary for JFC to smoothly perform operations in the future shall be succeeded by the Government upon the establishment of JFC.

3. The scope of assets succeeded by the Government pursuant to the provisions of the preceding Paragraph and other matters necessary for the succession of such assets to the Government shall be prescribed by a Cabinet Order.

4. The business year of the Agriculture, Forestry and Fisheries Finance Corporation commencing on April 1, 2008 shall end on the day immediately preceding the date of the dissolution of the Agriculture, Forestry and Fisheries Finance Corporation.

5. The preparation, etc. of (i) the settlement of accounts for the business year of the Agriculture, Forestry and Fisheries Finance Corporation commencing on April 1, 2008 and (ii) the profit and loss statement, balance sheet and list of assets for the same business year shall be made by JFC through the application of the provisions heretofore in force, except for the parts related to Article 18, Paragraph 1 (limited to the part related to the opinion of Auditors) and Article 19, Paragraph 1 (limited to the part related to the opinion of Auditors) of the Act Concerning Budget and Settlement of Accounts of the Public Finance Corporation (Act No. 99 of 1951) as prescribed in Article 22 of the Agriculture, Forestry and Fisheries Finance Corporation Act prior to the abolishment made pursuant to the provisions of Article 42 of the Supplementary Provisions hereof (Act No. 355 of 1952; hereinafter referred to as the “Former Agriculture, Forestry and Fisheries Finance Corporation Act”). In this case, when applying the provisions of the Act Concerning Budget and Settlement of Accounts of the Public Finance Corporation as prescribed in Article 22 of the Former Agriculture, Forestry and Fisheries Finance Corporation Act, “settlement of accounts for every business year by May 31 of the following year” referenced in Article 17 of the same Act shall be treated as meaning “settlement of accounts for the business year commencing on April 1, 2008 by November 30, 2008,” and “November 30 of the following year” referenced in Article 20 of the same Act shall be treated as meaning “November 30, 2009.”

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6. In the case that any profits arise in the calculation of profits and losses pursuant to the provisions of Article 23 of the Former Agriculture, Forestry and Fisheries Finance Corporation Act, which provisions are related to the business year of the Agriculture, Forestry and Fisheries Finance Corporation commencing on April 1, 2008, the payment to the national treasury shall be made by JFC through the application of the provisions heretofore in force. In this case, “every business year” and “May 31 of the following business year” referenced in Paragraph 1 of the same Article shall be treated as meaning “the business year commencing on April 1, 2008” and “November 30, 2008,” respectively; “the year preceding the fiscal year including the day prescribed in the same Paragraph” referenced in Paragraph 2 of the same Article shall be treated as meaning “Fiscal Year 2008.”

7. Registration of the dissolution if the Agriculture, Forestry and Fisheries Finance Corporation has been dissolved pursuant to the provisions of Paragraph 1 of this Article shall be prescribed by a Cabinet Order.

Article 17: Dissolution, etc. of the Japan Finance Corporation for Small and Medium Enterprise

1. The Japan Finance Corporation for Small and Medium Enterprise shall be dissolved at the time of the establishment of JFC, and all the rights and obligations of the Japan Finance Corporation for Small and Medium Enterprise shall be succeeded by JFC at that time, except for the assets succeeded by the Government pursuant to the provisions of the following Paragraph.

2. Among the rights which the Japan Finance Corporation for Small and Medium Enterprise actually has upon the establishment of JFC, the assets recognized as unnecessary for JFC to smoothly perform operations in the future shall be succeeded by the Government upon the establishment of JFC.

3. The scope of assets succeeded by the Government pursuant to the provisions of the preceding Paragraph and other matters necessary for the succession of such assets to the Government shall be prescribed by a Cabinet Order.

4. The business year of the Japan Finance Corporation for Small and Medium Enterprise commencing on April 1, 2008 shall end on the day immediately preceding the date of the dissolution of the Japan Finance Corporation for Small and Medium Enterprise.

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5. The preparation, etc. of (i) the settlement of accounts for the business year of the Japan Finance Corporation for Small and Medium Enterprise commencing on April 1, 2008 and (ii) the profit and loss statement, balance sheet and list of assets for the same business year shall be made by JFC through the application of the provisions heretofore in force, except for the parts related to Article 18, Paragraph 1 (limited to the part related to the opinion of Auditors) and Article 19, Paragraph 1 (limited to the part related to the opinion of Auditors) of the Act Concerning Budget and Settlement of Accounts of the Public Finance Corporation (Act No. 99 of 1951) as prescribed in Article 23 of the Japan Finance Corporation for Small and Medium Enterprise Act prior to the abolishment made pursuant to the provisions of Article 42 of the Supplementary Provisions hereof (Act No. 138 of 1953; hereinafter referred to as the “Former Japan Finance Corporation for Small and Medium Enterprise Act”). In this case, when applying the provisions of the Act Concerning Budget and Settlement of Accounts of the Public Finance Corporation as prescribed in Article 23 of the Former Japan Finance Corporation for Small and Medium Enterprise Act, “settlement of accounts for every business year by May 31 of the following year” referenced in Article 17 of the same Act shall be treated as meaning “settlement of accounts for the business year commencing on April 1, 2008 by November 30, 2008”; “November 30 of the following year” referenced in Article 20 of the same Act shall be treated as meaning “November 30, 2009.”

6. In the case that any profits and losses arising pursuant to the provisions of Article 24 of the Former Japan Finance Corporation for Small and Medium Enterprise Act, Paragraphs 13 and 14 of the Supplementary Provisions thereof, and Article 10 of the Provisional Measures Act for Special Exceptions to Credit Insurance Related to Midsize Entrepreneurs Which are Borrowers of Bankrupt Financial Institutions prior to revision (Act No. 151 of 1998; hereinafter referred to as the “Act for Special Exceptions to Credit Insurance for Midsize Entrepreneurs Prior to Revision”) by the provisions of Article 36 of the Act Concerning Adjustment of Relevant Acts as a Consequence of the Japan Finance Corporation Act, all of which provisions are related to the business year of the Japan Finance Corporation for Small and Medium Enterprise commencing on April 1, 2008, the disposition and payment to the national treasury shall be made by JFC through the application of the provisions heretofore in force. In this case, “every business year” and “May 31 of the following business year” referenced in Article 24, Paragraphs 1 and 10 of the Former Japan Finance Corporation for Small and Medium Enterprise Act and Article 10, Paragraph 6 of the Act for Special Exceptions to Credit Insurance for Midsize Entrepreneurs Prior to Revision shall be treated as meaning “the business year commencing on April 1, 2008” and “November 30, 2008,” respectively; “May 31 of the following business year” referenced in Article 24, Paragraph 5 of the Former Japan Finance Corporation for Small and Medium Enterprise Act shall be treated as meaning “November 30, 2008”; “the year preceding the fiscal year including the day prescribed in each of such Paragraphs” referenced in Paragraph 11 of the same Article shall be treated as meaning “Fiscal Year 2008”; “every business year” referenced in Paragraphs 13 and 14 of the Supplementary Provisions of the Former Japan Finance Corporation for Small and Medium Enterprise Act shall be treated as meaning “the business year commencing on April 1, 2008”; and “the year preceding the fiscal year including the day prescribed in the same Paragraph” referenced in Article 10, Paragraph 7 of the Act for Special Exceptions to Credit Insurance for Midsize Entrepreneurs Prior to Revision shall be treated as meaning “Fiscal Year 2008.”

7. Registration of the dissolution if the Japan Finance Corporation for Small and Medium Enterprise has been dissolved pursuant to the provisions of Paragraph 1 of this Article shall be prescribed by a Cabinet Order.

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Article 18: Dissolution, etc. of the Japan Bank for International Cooperation

1. The Japan Bank for International Cooperation shall be dissolved at the time of the establishment of JFC, and all the rights and obligations of the Japan Bank for International Cooperation shall be succeeded by JFC at that time, except for the assets succeeded by the Government pursuant to the provisions of the following Paragraph.

2. Among the rights which the Japan Bank for International Cooperation actually has upon the establishment of JFC, the assets recognized as unnecessary for JFC to smoothly perform operations in the future shall be succeeded by the Government upon the establishment of JFC.

3. The scope of assets succeeded by the Government pursuant to the provisions of the preceding Paragraph and other matters necessary for the succession of such assets to the Government shall be prescribed by a Cabinet Order.

4. The business year of the Japan Bank for International Cooperation commencing on April 1, 2008 shall end on the day immediately preceding the date of the dissolution of the Japan Bank for International Cooperation.

5. In the case that any profits and losses arise pursuant to the provisions of (i) Article 44 of the Japan Bank for International Cooperation Act prior to the abolishment made pursuant to the provisions of Article 42 of the Supplementary Provisions hereof (hereinafter referred to as the “Former Japan Bank for International Cooperation Act”) and (ii) Article 19 of the Former Force Realignment Special Measures Act, which provisions are related to the business year of the Japan Bank for International Cooperation commencing on April 1, 2008, the disposition and payment to the national treasury shall be made by JFC through the application of the provisions heretofore in force. In this case, “every business year” and “May 31 of the following business year” referenced in Paragraph 5 of Article 44 of the Former Japan Bank for International Cooperation Act shall be treated as meaning “the business year commencing on April 1, 2008” and “November 30, 2008,” respectively, and “May 31 of the following business year” referenced in Paragraph 4 of Article 19 of the Former Force Realignment Special Measures Act shall be treated as meaning “November 30, 2008.”

6. Registration of the dissolution if the Japan Bank for International Cooperation has been dissolved pursuant to the provisions of Paragraph 1 of this Article shall be prescribed by a Cabinet Order.

Article 19: Values of Properties Succeeded

1. The values of the assets and liabilities succeeded by JFC from NLFC, etc. (in the following Paragraph, referred to as the “Succeeded Properties”) shall be the values assessed by the Evaluation Officers.

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2. If the Evaluation Officers intend to make an assessment pursuant to the provisions of the preceding Paragraph, the then current values of the Succeeded Properties on the date of the establishment of JFC shall be used as the base values; provided, however, that if it is admitted that, taking into consideration the details of the Succeeded Properties, such as the kinds and uses thereof, use of the then current values of the Succeeded Properties as base values is inappropriate, the Evaluation Officers shall be allowed not to make an assessment based on the then current values of the Succeeded Properties.

3. In addition to the matters prescribed in the preceding two (2) Paragraphs, the Evaluation Officers and other matters necessary for an assessment shall be prescribed by a Cabinet Order.

Article 20: Accounts for Succeeded Properties

1. If the assets and liabilities are succeeded to JFC from NLFC, etc., the assets and liabilities listed in each of the following Items shall, upon such succession, be allocated as the assets and liabilities belonging to the account set forth in each of such Items, respectively:

(1) The assets and liabilities succeeded by JFC from the National Life Finance Corporation: The account related to the operations listed in Article 41, Item (1) hereof;

(2) The assets and liabilities succeeded by JFC from the Agriculture, Forestry and Fisheries Finance Corporation: The account related to the operations listed in Article 41, Item (2) hereof;

(3) The assets and liabilities related to the operations listed in Article 23-2, Items (1) and (3) of the Former Japan Finance Corporation for Small and Medium Enterprise Act among the assets and liabilities succeeded by JFC from the Japan Finance Corporation for Small and Medium Enterprise: The account related to the operations listed in Article 41, Item (3) hereof;

(4) The assets and liabilities related to the operations listed in Article 23-2, Item (2) of the Former Japan Finance Corporation for Small and Medium Enterprise Act among the assets and liabilities succeeded by JFC from the Japan Finance Corporation for Small and Medium Enterprise: The account related to the operations listed in Article 41, Item (4) hereof;

(5) The assets and liabilities related to (i) the operations listed in Article 23-2, Item (4) of the Former Japan Finance Corporation for Small and Medium Enterprise Act, (ii) the machine insurance transitional operations set forth in Paragraph 7 of the Supplementary Provisions of the Former Japan Finance Corporation for Small and Medium Enterprise Act and (iii) the operations of special insurance, etc., related to bankrupt financial institutions, etc., which operations are set forth in Article 7 of the Act for Special Exceptions to Credit Insurance for Midsize Entrepreneurs Prior to Revision, among the assets and liabilities succeeded by JFC from the Japan Finance Corporation for Small and Medium Enterprise: The account related to the Operations of Credit Insurance, etc.; and

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(6) The assets and liabilities succeeded by JFC from the Japan Bank for International Cooperation (excluding those listed in the following Item): The account related to the operations listed in Article 41, Item (6) hereof; and

(7) The assets and liabilities pertaining to the Financial Operations for Facilitating Realignment of United States forces in Japan among the assets and liabilities succeeded by JFC from the Japan Bank for International Cooperation: The financial account related to the Financial Operations for Facilitating Realignment of United States forces in Japan that is prescribed in Article 18 of the Act on Special Measures Concerning Smooth Implementation of Realignment of United States forces in Japan as revised by the provisions of Article 54 of the Act Concerning Adjustment of Relevant Acts as a Consequence of the Japan Finance Corporation Act.

2. In the cases set forth in the preceding Paragraph, the assets and liabilities specified by the competent Ministers upon consultation with the Minister of Finance among the assets and liabilities succeeded by JFC shall, notwithstanding the provisions of the same Paragraph, be allocated as the assets and liabilities belonging to the account related to the operations listed in Article 41, Item (7) hereof.

Article 21:

1. In the case where an allocation is made pursuant to the provisions of the preceding Article, the amount obtained by reducing, for each account related to the operations listed in each Item of Article 41 hereof, the total amounts of (i) liabilities belonging to such account and (ii) capital and capital reserve belonging to such account from the amount of assets belonging to such account (with respect to the account related to the operations listed in Item (1) of the same Article, the amount obtained by adding the Special Reserve for Managerial Improvement Funds set forth in Article 6, Paragraph 1 of the Supplementary Provisions hereof to such total amount) shall be allocated as the amount of the surplus belonging to such account.

2. In the case of the preceding Paragraph, if the amount of the surplus belonging to each account exceeds zero, such amount shall be the retained earnings reserve belonging to such account.

3. In the cases of the preceding two (2) Paragraphs, the amount of the surplus at the time of incorporation of JFC shall be the total amount of surpluses belonging to each of all accounts of JFC, and the amount of the retained earnings reserve at the time of incorporation of JFC shall be the total amount of the retained earnings reserves belonging to each of all accounts of JFC.

Article 22: Transitional Measures Regarding Revolving Mortgages

1. The revolving mortgages (limited to those mortgages before the principal is fixed) which NLFC, etc. have at the time of their dissolution shall secure the receivables obtained by JFC after its establishment, in addition to the receivables existing at the time of such dissolution.

2. With respect to the revolving mortgages set forth in the preceding Paragraph, the mortgagor of such revolving mortgages may request for the fixation of the principal to be secured.

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3. If a request is made pursuant to the provisions of the preceding Paragraph, the principal to be secured shall be deemed to have been fixed at the time of the dissolution of NLFC, etc.

4. The request set forth in Paragraph 2 of this Article shall not be allowed to be made at the time when two (2) weeks have passed from the date of such dissolution.

Article 23: Transitional Measures Necessary in Connection with Succession of Rights and Obligations

1. The guarantee contracts prescribed in each of the following Items and executed by the Government with respect to the liabilities related to the bonds listed in each of such Items and succeeded by JFC pursuant to the provisions of Article 15, Paragraph 1 of the Supplementary Provisions hereof, Article 16, Paragraph 1 thereof, Article 17, Paragraph 1 thereof or Article 18, Paragraph 1 thereof shall survive such succession with the conditions in force before such succession with respect to such liabilities related to such bonds. With respect to public dues, such as taxes, on the interest and redemption gain on the bonds listed below and related to the guarantee contracts executed pursuant to the provisions of Article 2 of the Foreign Capital Acceptance Act among such guarantee contracts, the provisions in force before such succession shall remain applicable.

(1) The National Life Bonds set forth in Article 22-3, Paragraph 1 of the Former National Life Finance Corporation Act:

Guarantee contracts executed pursuant to the provisions of Article 22-4 of the Former National Life Finance Corporation Act or Article 2 of the Foreign Capital Acceptance Act

(2) The Agriculture, Forestry and Fisheries Finance Corporation Bonds set forth in Article 24-2, Paragraph 1 of the Former Agriculture, Forestry and Fisheries Finance Corporation Act:

Guarantee contracts executed pursuant to the provisions of Article 24-3 of the Former Agriculture, Forestry and Fisheries Finance Corporation Act

(3) The Small and Medium Enterprises Bonds set forth in Article 25-2, Paragraph 1 of the Former Japan Finance Corporation for Small and Medium Enterprise Act:

Guarantee contracts executed pursuant to the provisions of Article 25-3 of the Former Japan Finance Corporation for Small and Medium Enterprise Act or Article 2 of the Foreign Capital Acceptance Act

(4) The Japan Bank for International Cooperation Bonds set forth in Article 45, Paragraph 1 of the Former Japan Bank for International Cooperation Act:

Guarantee contracts executed pursuant to the provisions of Article 47 of the Former Japan Bank for International Cooperation Act or Article 2 of the Foreign Capital Acceptance Act

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(5) Foreign currency bonds, etc. set forth in Article 39-2, Paragraph 1 of the Export-Import Bank of Japan Act prior to the abolishment made pursuant to the provisions of Article 15 of the Supplementary Provisions of the Former Japan Bank for International Cooperation Act (Act No. 268 of 1950; hereinafter referred to as the “Former Export-Import Bank Act):

Guarantee contracts executed pursuant to the provisions of Article 39-3 of the Former Export-Import Bank Act or Article 2 of the Foreign Capital Acceptance Act prior to revision by the provisions of Article 23 of the Supplementary Provisions of the Former Japan Bank for International Cooperation Act

2. The provisions of Article 52 hereof shall apply to the National Life Bonds, the Agriculture, Forestry and Fisheries Finance Corporation Bonds, the Small and Medium Enterprises Bonds, the Japan Bank for International Cooperation Bonds and the foreign currency bonds, etc., all of which are set forth in the preceding Paragraph, by deeming these bonds as the corporate bonds of JFC.

3. With respect to the interest rate, redemption period and period of deferment related to the loan of funds performed by the Agriculture, Forestry and Fisheries Finance Corporation before the enforcement of the provisions of Article 42 of the Supplementary Provisions hereof (which loan includes the loan of funds related to the loan applications accepted by the Agriculture, Forestry and Fisheries Finance Corporation before the enforcement of the provisions of the same Article and which is performed by JFC pursuant to the provisions of Article 37, Paragraph 1, Item (3) of the Supplementary Provisions hereof), the provisions in force before the enforcement of such provisions shall remain applicable.

Article 24:

1. If the obligations of the Japan Bank for International Cooperation are succeeded to JFC pursuant to the provisions of Article 18, Paragraph 1 of the Supplementary Provisions hereof, JFC and the Incorporated Administrative Agency - Japan International Cooperation Agency, shall jointly and severally be liable for repayment of the liabilities related to (x) the Japan Bank for International Cooperation Bonds set forth in Article 45, Paragraph 1 of the Japan Bank for International Cooperation Act Prior to Revision and (y) (i) the foreign currency bonds, etc. set forth in Article 39-2, Paragraph 1 of the Former Export-Import Bank Act and (ii) the Overseas Economic Cooperation Fund Bonds set forth in Article 29-2, Paragraph 1 of the Overseas Economic Cooperation Fund Act prior to revision (Act No. 173 of 1960) by the provisions of Article 15 of the Supplementary Provisions of the Japan Bank for International Cooperation Act Prior to Revision, all of which bonds have been issued at the time of such succession.

2. A holder of the Japan Bank for International Cooperation bonds, the foreign currency bonds, etc. or the Overseas Economic Cooperation Fund bonds, all of which bonds are set forth in the preceding Paragraph, shall, with respect to the properties of JFC or the Incorporated Administrative Agency - Japan International Cooperation Agency, have the right to have his/her receivables satisfied in preference to other creditors.

3. The order of the statutory lien set forth in the preceding Paragraph shall be next to the general liens prescribed by the provisions of the Civil Code.

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Article 25: Transitional Measures for Limitation on Use of Name

With respect to any person who is actually using the words “Japan Finance Corporation” in its name at the time of the enforcement of this Act, the provisions of Article 5, Paragraph 1 hereof shall not apply for the period of six (6) months after the enforcement of this Act.

Article 26: Transitional Measures of Practice of Domestic Financial Operations

1. The Organizing Members may, as governed by the provisions of Article 12 hereof, determine the practice of the Domestic Financial Operations and obtain the authorization of the competent Ministers.

2. The practice of the Domestic Financial Operations authorized pursuant to the provisions of the preceding Paragraph shall, at the time of the establishment of JFC, be deemed as the practice of the Domestic Financial Operations determined by JFC and authorized by the competent Ministers pursuant to the provisions of Article 12 hereof.

Article 27: Transitional Measures for the Executing Policy on Operations to Facilitate Crises Responses

1. The Organizing Members shall, as governed by the provisions of Article 15 hereof, determine the Executing Policy on Operations to Facilitate Crises Responses and obtain the recognition of the competent Ministers, and publish such Executing Policy on Operation to Facilitate Crises Responses.

2. The Executing Policy on Operations to Facilitate Crises Responses approved pursuant to the provisions of the preceding Paragraph shall be deemed as the Executing Policy on Operations to Facilitate Crises Responses determined by JFC and approved by the competent Ministers pursuant to the provisions of Article 15 hereof.

Article 28: Transitional Measures for Agreement

1. The Organizing Members may, as governed by the provisions of Article 21 hereof, execute the Agreement with obtaining the authorization of the competent Ministers.

2. The Agreement authorized and executed pursuant to the provisions of the preceding Paragraph shall, at the time of establishment of JFC, be deemed as the Agreement authorized by the competent Ministers and executed by JFC pursuant to the provisions of Article 21 hereof.

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Article 29: Transitional Measures for Business Year

The initial business year of JFC shall, notwithstanding the provisions of Article 28 hereof, commence on the date of its establishment and end on March 31, 2009.

Article 30: Acts of Preparation

NLFC, etc. may, notwithstanding the provisions of Article 1 of the National Life Finance Corporation Act, Article 1 of the Agriculture, Forestry and Fisheries Finance Corporation Act, Article 1 of the Japan Finance Corporation for Small and Medium Enterprise Act and Article 1 of the Japan Bank for International Cooperation Act, perform acts of preparation necessary for JFC to start its operations smoothly at the time of its establishment, such as those acts related to the operations listed in Article 41, Item (7) hereof. In this case, for the purpose of applying the provisions, such as those of supervision, to the acts of preparation performed by the persons listed in each of the following Items, such acts of preparation shall be deemed as the operations prescribed in the relevant Item below:

(1) the National Life Finance Corporation:

Operations listed in Article 18, Item (1) of the National Life Finance Corporation Act

(2) the Agriculture, Forestry and Fisheries Finance Corporation:

Operations set forth in Article 18 of the Agriculture, Forestry and Fisheries Finance Corporation Act

(3) the Japan Finance Corporation for Small and Medium Enterprise:

Operations listed in Article 23-2, Item (1) of the Japan Finance Corporation for Small and Medium Enterprise Act

(4) the Japan Bank for International Cooperation:

Operations listed in Article 41, Paragraph 1, Item (1) of the Japan Bank for International Cooperation Act

Article 31: Non-taxation

1. No registration license taxes shall be imposed with respect to the registration or recording made as a result of JFC’s succession of rights under the provisions of Article 15, Paragraph 1 of the Supplementary Provisions hereof, Article 16, Paragraph 1 thereof, Article 17, Paragraph 1 thereof and Article 18, Paragraph 1 thereof.

2. No real property acquisition taxes or automobile acquisition taxes may be imposed on acquisition of real property or automobiles as a result of JFC’s succession of rights under the provisions of Article 15, Paragraph 1 of the Supplementary Provisions hereof, Article 16, Paragraph 1 thereof, Article 17, Paragraph 1 thereof and Article 18, Paragraph 1 thereof.

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Article 32: Exceptions of Operations

1. In addition to the operations set forth in Article 11 hereof, JFC may, for the time being, make loans of the funds necessary to improve, develop, rehabilitate or acquire the facilities required for the power generation set forth in Article 2, Paragraph 1 of the Act on the Promotion of Introducing Electricity into Farming and Fishing Villages (Act No. 358 of 1952).

2. The operations set forth in the preceding Paragraph shall be deemed, for the purpose of applying this Act, as the loan of funds listed in t. of the rightmost column of Item (8) of Schedule I hereto and provided pursuant to the provisions of Article 11, Paragraph 1, Item (1) hereof.

Article 33:

If JFC makes, for the time being, the loan of the funds set forth in Paragraph 8 of the Supplementary Provisions of the Act for the Promotion of Strengthening the Farm Management Foundation (Act No. 65 of 1980) pursuant to the provisions of Article 11, Paragraph 1, Item (1) hereof (limited to the part related to Item (8) of Schedule I hereto), JFC may make the loan of funds free of interest.

Article 34:

1. If JFC makes, for the time being, the loan of the funds related to the agreement set forth in Article 6, Paragraph 2 of the Act on Temporally Measures for Accommodation, etc. of Funds to Promote the Strengthening, etc. of the Forestry Management Foundation (Act No. 51 of 1979) pursuant to the provisions of Article 11, Paragraph 1, Item (1) hereof (limited to the part related to Item (8) of Schedule I hereto), JFC may make the loan of funds free of interest.

2. The redemption period and period of deferment of the loan of funds set forth in the preceding Paragraph shall be determined by JFC within the period not exceeding thirty-five (35) years and the period not exceeding twenty (20) years, respectively.

Article 35:

When applying the provisions of Article 12, Paragraph 4 to the funds listed in the column of the Type of Loans in Schedule V hereto, the following respective percentages referenced in the Interest Rate (Annual) column in the same Schedule shall, for the time being, be treated as meaning as follows: “3.5%” means “the interest rate of 3.5% or less, which is specified by the competent Ministers”; “5%” means “the interest rate of 5% or less, which is specified by the competent Ministers”; “6.5%” means “the interest rate of 6.5% or less, which is specified by the competent Ministers”; “7.5%” means “the interest rate of 7.5% or less, which is specified by the competent Ministers”; and “4.5%” means “the interest rate of 4.5% or less, which is specified by the competent Ministers.”

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Article 36:

1. JFC shall, in addition to the operations set forth in Article 11 hereof and Article 32 of Supplementary Provisions hereof, perform operations which (i) are set forth in Article 11 of the Machinery Credit Insurance Act (Act No. 156 of 1961) prior to the abolishment made pursuant to the provisions of Article 1 (limited to the part related to Item (2) of the same Article) of the Act Concerning Abolishment, Etc. of the Japan Small and Medium Enterprise Corporation Act and the Machinery Credit Insurance Act (Act No. 146 of 2002; hereinafter referred to as the “Abolishment Act Prior to Revision”) prior to revision by the provisions of Article 2 of the Supplementary Provisions of the Act for Partial Amendment of the Japan Finance Corporation for Small and Medium Enterprise Act and the Act of the Organization for the Incorporated Administrative Agency - Small & Medium Enterprises and Regional Innovation, Japan (Act No. 35 of 2004) and (ii) which are related to the insurance related matters with respect to which the provisions in force prior to such abolishment shall remain applicable pursuant to the provisions of Article 8, Paragraph 1 of the Supplementary Provisions of the Abolishment Act Prior to Revision.

2. If JFC performs the operations set forth in the preceding Paragraph pursuant to the provisions of the same Paragraph, the provisions of “excluding those listed in Item (7) of Schedule III hereto)” referenced in Article 11, Paragraph 1, Item (6) hereof shall be treated as meaning “excluding those listed in Item (7) of Schedule III hereto) and the operations set forth in Article 36, Paragraph 1 of the Supplementary Provisions hereof”; “(i) operations listed in Paragraph 1, Items (1) through (3) of the preceding Article and the operation of providing information to the users of such operations pursuant to the provisions of Item (5) of the same Paragraph and (ii) the operations incidental to (i) above pursuant to the provisions of Item (6) of the same Paragraph” referenced in Article 12, Paragraph 1 hereof shall be treated as meaning “(i) the operations listed in Paragraph 1, Items (1) through (3) of the preceding Article and the operations set forth in Article 36, Paragraph 1 of the Supplementary Provisions hereof and (ii) the provision of information to the users of the operations set forth in (i) above pursuant to the provisions of Paragraph 1, Item (5) of the same Article” and (iii) the operations incidental to the operations set forth in (i) and (ii) above pursuant to the provisions of Item (6) of the same Paragraph”; “the loan of funds listed in the rightmost column of Item (15) of Schedule I hereto pursuant to the provisions of Article 11, Paragraph 1, Item (1) and the operations listed in Item (3) of the same Paragraph” referenced in Article 14, Paragraph 1 hereof shall be treated as meaning “(i) the loan of funds listed in the rightmost column of Item (15) of Schedule I hereto pursuant to the provisions of Article 11, Paragraph 1, Item (1) and the operations listed in Item (3) of the same Paragraph and (ii) the operations set forth in Article 36, Paragraph 1 of the Supplementary Provisions hereof”; “the operations listed in Article 11, Paragraph 1, Item (3) hereof” referenced in Article 31, Paragraph 3 hereof shall be treated as meaning “the operations listed in Article 11, Paragraph 1, Item (3) hereof and the operations set forth in Article 36, Paragraph 1 of the Supplementary Provisions hereof”; “(i) The operations of providing loans to the persons listed in the middle column of Items (15) of Schedule I hereto pursuant to the provisions of Article 11, Paragraph 1, Item (1) hereof and the operations listed in Item (3) of the same Paragraph and (ii) the operations of providing information to users of the operations set forth in (i) above pursuant to the provisions of Item (5) of the same Paragraph” referenced in Article 41, Item (5) hereof shall be treated as meaning “(i) (i-i) The operations of providing loans to the persons listed in the middle column of Items (15) of Schedule I hereto pursuant to the provisions of Article 11, Paragraph 1, Item (1) hereof and the operations listed in Item (3) of the same Paragraph and (i-ii) the operations set forth in Article 36, Paragraph 1 of the Supplementary Provisions hereof and (ii) the operations of providing information to users of the operations set forth in (i) above pursuant to the provisions of Article 11, Paragraph 1, Item (5) hereof”; “(i) the operations of providing loans to the persons listed in the middle columns of Items (14) and (15) of Schedule I hereto pursuant to the provisions of Article 11, Paragraph 1, Item (1) hereof, the operations listed in Items (3) through (9) of Schedule II hereto pursuant to the provisions of Item (2) of the same Paragraph ([omitted]) and the operations listed in Item (3) of the same Paragraph and (ii) the operations of providing information to the users of the operations set forth in (i) above pursuant to the provisions of Item (5) of the same Paragraph” and “the Minister of Finance” referenced in Article 64, Paragraph 1, Item (5) hereof shall be treated as meaning “(i) (i-i) the operations of providing loans to the persons listed in the middle columns of Items (14) and (15) of Schedule I hereto pursuant to the provisions of Article 11, Paragraph 1, Item (1) hereof, the operations listed in Items (3) through (9) of Schedule II hereto pursuant to the provisions of Item (2) of the same Paragraph ([omitted]) and the operations listed in Item (3) of the same Paragraph and (i-ii) the operations listed in Article 36, Paragraph 1 of the Supplementary Provisions hereof and (ii) the operations of providing information to the users of the operations set forth in (i) above pursuant to the provisions of Article 11, Paragraph 1, Item (5) hereof” and “the Minister of Finance (the Minister of Economy, Trade and Industry with respect to the matters related to the operations set forth in Article 36, Paragraph 1 of the Supplementary Provisions hereof)” respectively; and “Article 11” referenced in Article 73, Item (3) hereof shall be treated as meaning “Article 11 hereof and Article 36, Paragraph 1 of the Supplementary Provisions hereof.”

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Article 37:

1. JFC may, in addition to the operations set forth in Article 11 hereof, Article 32 of the Supplementary Provisions hereof and the preceding Article, engage in the following operations (excluding those falling under the operations set forth in Article 11 hereof, Article 32 of the Supplementary Provisions hereof or the preceding Article):

(1) Management and collection of the loan receivables related to the operations, such as the loan of funds, performed by NLFC, etc. before the enforcement of the provisions of Article 42 of the Supplementary Provisions hereof until the collection of such loan receivables is completed;

(2) For the time being, operations which are set forth in Article 23 of the Former Japan Bank for International Cooperation Act and which are related to the agreement concerning the guarantee of liabilities executed by the Japan Bank for International Cooperation before the enforcement of the provisions of Article 42 of the Supplementary Provisions hereof;

(3) For the time being, operations, such as the loan of funds, related to the loan applications accepted by NLFC, etc. before the enforcement of the provisions of Article 42 of the Supplementary Provisions hereof;

(4) Provision of information to the users of operations set forth in the preceding three (3) Items that pertains to such operations; and

(5) Any other operations incidental to those listed in each of the preceding Items.

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2. If JFC engages in the operations set forth in the preceding Paragraph pursuant to the provisions of the same Paragraph, “(iii) the operations incidental to the operations set forth in (i) and (ii) above pursuant to the provisions of Item (6) of the same Paragraph and (iv) finance and accounting related to the operations set forth in (i) through (iii) above” referenced in Article 31, Paragraph 2, Item (1) a hereof, Article 41, Item (1) hereof and Article 64, Paragraph 1, Item (2) hereof shall be treated as meaning “(iii) the operations incidental to the operations set forth in (i) and (ii) above pursuant to the provisions of Item (6) of the same Paragraph and (iv) (iv-i) the operations listed in Article 37, Paragraph 1, Item (1) of the Supplementary Provisions hereof (which operations are limited to those performed by the National Life Finance Corporation), (iv-ii) the operations listed in Item (3) of the same Paragraph (those operations are limited to those related to the loan applications accepted by the National Life Finance Corporation) and (iv-iii) the operations listed in Items (4) and (5) of the same Paragraph, which are related to the operations set forth in (iv-i) and (iv-ii) above and (v) finance and accounting related to the operations set forth in (i) through (iv) above”; “(iii) the operations incidental to the operations set forth in (i) and (ii) above pursuant to the provisions of Item (6) of the same Paragraph and (iv) finance and accounting related to the operations set forth in (i) through (iii) above” referenced in Article 31, Paragraph 2, Item (1) b hereof , Article 41, Item (2) hereof and Article 64, Paragraph 1, Item (4) hereof shall be treated as meaning “(iii) the operations incidental to the operations [set forth in (i) and (ii) above] pursuant to the provisions of Item (6) of the same Paragraph and (iv) (iv-i) the operations listed in Article 37, Paragraph 1, Item (1) of the Supplementary Provisions hereof (which operations are limited to those performed by the Agriculture, Forestry and Fisheries Finance Corporation), (iv-ii) the operations listed in Item (3) of the same Paragraph (those operations are limited to those related to the loan applications accepted by the Agriculture, Forestry and Fisheries Finance Corporation) and (iv-iii) the operations listed in Items (4) and (5) of the same Paragraph, which are related to the operations set forth in (iv-i) and (iv-ii) above and (v) finance and accounting related to the operations set forth in (i) through (iv) above”; “(iii) the operations incidental to the operations set forth in (i) and (ii) above pursuant to the provisions of Item (6) of the same Paragraph Article 11, Paragraph 1 and (iv) finance and accounting related to the operations set forth in (i) through (iii) above” referenced in Article 31, Paragraph 2, Item (1) c hereof, Article 41, Item (3) hereof and Article 64, Paragraph 1, Item (5) hereof shall be treated as meaning “(iii) the operations incidental to the operations set forth in (i) and (ii) above pursuant to the provisions of Item (6) of the same Paragraph and (iv) (iv-i) the operations listed in Article 37, Paragraph 1, Item (1) of the Supplementary Provisions hereof (which operations are limited to those performed by the Japan Finance Corporation for Small and Medium Enterprise), (iv-ii) the operations listed in Item (3) of the same Paragraph (those operations are limited to those related to the loan applications accepted by the Japan Finance Corporation for Small and Medium Enterprise) and (iv-iii) the operations listed in Items (4) and (5) of the same Paragraph, which are related to the operations set forth in (iv-i) and (iv-ii) above and (v) finance and accounting related to the operations set forth in (i) through (iv) above”; “(ii) the operations incidental to the operations set forth in (i) above pursuant to the provisions of Item (6) of the same Paragraph and (iii) finance and accounting related to the operations set forth in (i) and (ii) above” referenced in Article 41, Item (6) hereof and Article 64, Paragraph 1, Item (6) hereof shall be treated as meaning “(ii) the operations incidental to the operations set forth in (i) and (ii) above pursuant to the provisions of Item (6) of the same Paragraph and (iii) (iii-i) the operations listed in Article 37, Paragraph 1, Item (1) of the Supplementary Provisions hereof (which operations are limited to those performed by the Japan Bank for International Cooperation), the operations listed in Item (2) of the same Paragraph, the operations listed in Item (3) of the same Paragraph (those operations are limited to those related to the loan applications accepted by the Japan Bank for International Cooperation) and (iii-ii) the operations listed in Items (4) and (5) of the same Paragraph, which are related to the operations set forth in (iii-i) above and (iv) finance and accounting related to the operations set forth in (i) through (iii) above; “Article 11, Paragraph 1 or 2 or Article 53 hereof” referenced in Article 63, Paragraph 1 hereof shall be treated as meaning “Article 11, Paragraph 1 or 2, Article 53 hereof or Article 37, Paragraph 1 of the Supplementary Provisions hereof”; “the operations listed in Article 41, Item (6) hereof” referenced in Article 63, Paragraph 2, Item (1) hereof shall be treated as meaning “the operations listed in Article 41, Item (6) hereof and the operations set forth in Article 37, Paragraph 1 of the Supplementary Provisions hereof (which operations are limited to those performed by the Japan Bank for International Cooperation before the enforcement of the provisions of Article 42 of the Supplementary Provisions hereof or those related to the loan applications accepted by the Japan Bank for International Cooperation before the enforcement of the same provisions)”; “the operations set forth in Article 11, Paragraph 1 hereof and the actions listed in each of the Items of Article 53 hereof” referenced in Article 63, Paragraph 2, Item (2) hereof shall be treated as meaning “the operations set forth in Article 11, Paragraph 1 hereof and Article 37, Paragraph 1 of the Supplementary Provisions hereof and the actions listed in each of the Items of Article 53 hereof”; “Article 11, Paragraph 1 hereof” referenced in Article 63, Paragraph 3 hereof shall be treated as meaning “Article 11, Paragraph 1 hereof or Article 37, Paragraph 1 of the Supplementary Provisions hereof”; and “Article 11 hereof” referenced in Article 73, Item (3) hereof shall be treated as meaning “Article 11 hereof and Article 37, Paragraph 1 of the Supplementary Provisions hereof.”

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Article 38: Exception of Delegation of Operations

1. If the Incorporated Administrative Agency - Welfare And Medical Service Agency performs the operations set forth in Article 5-2, Paragraph 3 of the Supplementary Provisions of the Act of the Incorporated Administrative Agency - Welfare And Medical Service Agency (Act No. 166 of 2002), JFC may, in addition to the cases set forth in Article 14 hereof, delegate the Incorporated Administrative Agency - Welfare And Medical Service Agency, to perform, among the fund-loan operations listed in the rightmost column of Item (2) of Schedule I hereto and performed pursuant to the provisions of Article 11, Paragraph 1, Item (1) hereof, the operations concerning (i) the acceptance of the applications for the loan of the Small Sum of Funds for Education (which means small sum of funds for education listed in the rightmost column of Item (2) of the same Schedule; the same shall apply in the following Article) by any person whose application is submitted to JFC through the Incorporated Administrative Agency - Welfare And Medical Service Agency, pursuant to the provisions of Article 5-2, Paragraph 3 of the Supplementary Provisions of the same Act and (ii) the delivery of monetary loans related to the loan of such Small Sum of Funds for Education to such person.

2. The provisions of Article 58, Paragraph 2 hereof, Article 59 hereof and Article 60 hereof shall apply mutatis mutandis to the case where JFC delegates the Incorporated Administrative Agency - Welfare And Medical Service Agency to perform the operations pursuant to the provisions of the preceding Paragraph. In this case, the following phrases referenced in Article 59, Paragraph 1 hereof shall be deemed to be replaced as follows: “the Juridical Person Delegated (including those juridical persons delegated pursuant to the provisions of Article 14, Paragraph 4 hereof or Article 54, Paragraph 2 hereof; the same shall apply in this Paragraph and Article 71 hereof)” with “the Incorporated Administrative Agency - Welfare And Medical Service Agency”; “of the Juridical Person Delegated” with “of the Incorporated Administrative Agency - Welfare And Medical Service Agency”; and “to the Delegated Juridical Person” with “to the Incorporated Administrative Agency - Welfare And Medical Service Agency.”

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3. A Director, Executive Officer, Accounting Advisor (if the Accounting Advisor is a juridical person, the member who should execute the duties of such accounting advisor), Auditor or employee of JFC, or an officer or employee of the Incorporated Administrative Agency - Welfare And Medical Service Agency who has failed to submit reports pursuant to the provisions of Article 59, Paragraph 1 hereof, which shall apply mutatis mutandis by making replacements in the preceding Paragraph, or submitted false reports on the matters to be reported pursuant to the provisions of the same Paragraph, or refused, obstructed or evaded an inspection to be carried out pursuant to the provisions of the same Paragraph shall be liable to punishment by a fine not exceeding three hundred thousand yen (¥300,000).

4. A Director, Executive Officer, Accounting Advisor or the member who should execute the duties of such Accounting Advisor, or Auditor, of JFC who has violated the order of the competent Ministers issued pursuant to the provisions of Article 58, Paragraph 2, which shall apply mutatis mutandis in Paragraph 2 of this Article, shall be liable to a non-penal fine not exceeding one million yen (¥1,000,000).

Article 39:

1. JFC may, in addition to the cases set forth in Article 14 hereof and the preceding Paragraph, delegate, among the fund-loan operations listed in the rightmost column of Item (2) of Schedule I hereto and provided pursuant to the provisions of Article 11, Paragraph 1, Item (1) hereof, the Incorporated Administrative Agency - Postal Savings & Postal Life Insurance Management Organization, to perform the operations concerning (i) the acceptance of the applications for the loan of the Small Sum of Funds for Education by any depositor with the postal savings listed in Article 5, Paragraph 1, Item (6) of the Supplementary Provisions of the Act Concerning Adjustment, etc. of Relevant Acts as a Consequence of the Enforcement of Postal Services Privatization Act, etc. (Act No. 102 of 2005) who actually exists at the time of the enforcement of the same Act and whose application is submitted to JFC, pursuant to the provisions of Article 63-2 (including cases where the postal savings shall still remain effective pursuant to the provisions of Article 5, Paragraph 1 of the Supplementary Provisions of the same Act) of the Postal Savings Act (Act No. 144 of 1947) prior to the abolishment made pursuant to the provisions of Article 2 of the Act Concerning Adjustment, etc. of Relevant Acts as a Consequence of the Enforcement of Postal Services Privatization Act, etc., through the Incorporated Administrative Agency - Postal Savings & Postal Life Insurance Management Organization, or Japan Post existing before being dissolved pursuant to the provisions of Article 166, Paragraph 1 of the Postal Services Privatization Act (Act No. 97 of 2005) and (ii) the delivery of the monetary loans related to the loan of such Small Sum of Funds for Education to such person.

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2. The provisions of Article 58, Paragraph 2 hereof, Article 59 hereof and Article 60 hereof shall apply mutatis mutandis to the case where JFC delegates the Incorporated Administrative Agency - Postal Savings & Postal Life Insurance Management Organization to perform the operations pursuant to the provisions of the preceding Paragraph.

3. Any Director, Executive Officer, Accounting Advisor (if the Accounting Advisor is a juridical person, the member who should execute the duties of such Accounting Advisor), Auditor or employee of JFC shall be liable to punishment by a fine not exceeding three hundred thousand yen (¥300,000) if he/she has failed to make the report set forth in the provisions of Article 59, Paragraph 1 hereof, which shall apply mutatis mutandis to the preceding Paragraph, made a false report on matters to be reported pursuant to the provisions of the same Paragraph, or refused, obstructed or evaded an inspection to be carried out pursuant to the provisions of the same Paragraph.

4. Any Director, Executive Officer, Accounting Advisor or the member who should execute the duties of such Accounting Advisor, or Auditor, of JFC shall be liable to a non-penal fine not exceeding one million yen (¥1,000,000) if he/she has violated the order of the competent Ministers issued pursuant to the provisions of Article 58, Paragraph 2, which shall apply mutatis mutandis to Paragraph 2 of this Article.

Article 40: Acceptance of Funds Entrusted from the Incorporated Administrative Agency Agriculture, Forestry and Fisheries Credit Foundation

If JFC intends to accept from the Incorporated Administrative Agency - Agriculture, Forestry and Fisheries Credit Foundation, the funds which are entrusted related to the agreement set forth in Article 6, Paragraph 2 of the Act on Temporally Measures Concerning Financial Accommodations, etc. to Promote Strengthening of Forestry Managerial Foundation, JFC shall obtain the authorization of the competent Ministers.

Article 41: Delegation to Cabinet Orders

In addition to those prescribed in Article 3 of the Supplementary Provisions hereof through the preceding Article, the matters necessary with respect to the incorporation of JFC and the dissolution of NLFC, etc. shall be prescribed by Cabinet Orders.

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Article 42: Abolishment of the National Life Finance Corporation Act, etc.

The following Acts shall be abolished:

(1) The National Life Finance Corporation Act;

(2) The Agriculture, Forestry and Fisheries Finance Corporation Act;

(3) The Japan Finance Corporation for Small and Medium Enterprise Act; and

(4) The Japan Bank for International Cooperation Act.

Article 43: Transitional Measures Necessary in Connection with Abolishment of the National Life Finance Corporation Act, etc.

1. The acts, such as disposition and procedures, performed before the enforcement of the provisions of the preceding Paragraph pursuant to the provisions of the Former National Life Finance Corporation Act (excluding Article 13 thereof), the Former Agriculture, Forestry and Fisheries Finance Corporation Act (excluding Article 10 thereof), the Former Japan Finance Corporation for Small and Medium Enterprise Act (excluding Article 11 thereof) or the Former Japan Bank for International Cooperation Act (excluding Article 11 thereof) shall be deemed as the acts, such as disposition and procedures, performed pursuant to the corresponding provisions of this Act.

2. With respect to the obligation, pursuant to the provisions of Article 19 of the Former Japan Bank for International Cooperation Act, to prohibit the officers or employees of the Japan Bank for International Cooperation or persons who were in these positions from disclosing or appropriating any secrets which became known in connection with their duties, the provisions in force before the enforcement of the provisions of the preceding Article shall remain applicable even after the enforcement of the provisions of the preceding Article.

3. In addition to the matters set forth in the preceding two (2) Paragraphs, the transitional measures which are necessary in connection with the abolishment of the Acts listed in each Item of the preceding Article shall be prescribed by a Cabinet Order.

Article 44: Transitional Measures Concerning Application of Penal Provisions

With regard to the application of penal provisions to the acts performed prior to the enforcement of Article 42 of the Supplementary Provisions hereof and the acts performed after the enforcement of the same Article related to the matters to which the provisions in force theretofore shall remain applicable pursuant to the provisions of this Act, the penal provisions in force theretofore shall remain applicable.

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Article 45: Deemed Designation, etc. to Kabushiki Kaisha Central Cooperative Bank for Commerce and Industry as Designated Financial Institution

1. Kabushiki Kaisha Central Cooperative Bank for Commerce and Industry shall be deemed to have been designated pursuant to the provisions of Article 11, Paragraph 2 hereof on the date prescribed in Article 1, Item (5) of the Supplementary Provisions hereof. In this case, the provisions of Article 16, Paragraphs 1, 4 and 5 hereof and Article 18 hereof shall not apply. In addition, “Any person who intends to obtain the Designation shall, in accordance with the procedures prescribed by the competent Ministry Ordinance,” and “submit the same to the competent Ministers by attaching the same to the application for designation” referenced in Article 16, Paragraph 2 hereof shall be treated as meaning “Any Designated Financial Institution shall, before the execution of the Agreement set forth in Article 21, Paragraph 1 hereof,” and “obtain the authorization of the competent Ministers,” respectively. “When the competent Ministers grant the Designation, the competent Ministers shall give the public notice, in the official gazette, of the Designated Financial Institution’s” referenced in Article 17, Paragraph 1 hereof shall be treated as meaning “When Kabushiki Kaisha Central Cooperative Bank for Commerce and Industry is deemed to have had the Designation prescribed in Article 11, Paragraph 2 pursuant to the provisions of Article 45, Paragraph 1 of the Supplementary Provisions hereof, the competent Ministers shall give the public notice, in the official gazette, of Kabushiki Kaisha Central Cooperative Bank for Commerce and Industry’s,” and other necessary technical replacements shall be prescribed by a Cabinet Order.

2. The Shoko Chukin Bank which actually exists at the time of enforcement of Kabushiki Kaisha Central Cooperative Bank for Commerce and Industry Act (hereinafter referred to as the “Juridical Person before Conversion”) may perform the acts of preparation necessary for Kabushiki Kaisha Central Cooperative Bank for Commerce and Industry to smoothly commence the Crises Response Operations on the date prescribed in Article 1, Item (5) of the Supplementary Provisions hereof, such as the application for authorization set forth in Article 16, Paragraph 2 hereof, which shall apply by making replacements pursuant to the provisions of the preceding Paragraph and the execution of the Agreement set forth in Article 21, Paragraph 1 hereof.

3. The competent Ministers who have received an application for authorization made by the Juridical Person before Conversion pursuant to the provisions of the preceding Paragraph may grant the authorization as governed by the provisions of Article 16, Paragraph 2, which shall apply by making replacements pursuant to the provisions of the Paragraph 1 of this Article. In this case, if the Juridical Person before Conversion is authorized as governed by the provisions of the Article 16, Paragraph 2, Kabushiki Kaisha Central Cooperative Bank for Commerce and Industry shall be deemed to have been authorized pursuant to the provisions of the same Paragraph on the date prescribed in Article 1, Item (5) of the Supplementary Provisions hereof.

4. The Agreement executed as governed by the provisions of Article 21 hereof by the Juridical Person before Conversion pursuant to the provisions of Paragraph 2 of this Article shall be deemed as the Agreement executed by Kabushiki Kaisha Central Cooperative Bank for Commerce and Industry pursuant to the provisions of Article 21 hereof on the date prescribed in Article 1, Item (5) of the Supplementary Provisions hereof.

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Article 46: Deemed Designation, etc. to Kabushiki Kaisha Development Bank of Japan as Designated Financial Institution

1. Kabushiki Kaisha Development Bank of Japan shall be deemed to have been designated pursuant to the provisions of Article 11, Paragraph 2 hereof on the date prescribed by Article 1, Item (5) of the Supplementary Provisions hereof. In this case, the provisions of Article 16, Paragraphs 1, 4 and 5 hereof and Article 18 hereof shall not apply. In addition, “Any person who intends to obtain the Designation shall, in accordance with the procedures prescribed by the competent Ministry Ordinance,” and “submit the same to the competent Ministers by attaching the same to the application for designation” referenced in Article 16, Paragraph 2 hereof shall be treated as meaning “Any Designated Financial Institution shall, before the execution of the Agreement set forth in Article 21, Paragraph 1 hereof,” and “obtain the authorization of the competent Ministers,” respectively. “When the competent Ministers grant the Designation, the competent Ministers shall give the public notice, in the official gazette, of the Designated Financial Institution’s” referenced in Article 17, Paragraph 1 hereof shall be treated as meaning “When Kabushiki Kaisha Development Bank of Japan is deemed to have had the Designation prescribed in Article 11, Paragraph 2 pursuant to the provisions of Article 46, Paragraph 1 of the Supplementary Provisions hereof, the competent Ministers shall give the public notice, in the official gazette, of Kabushiki Kaisha Development Bank of Japan’s,” and other technical replacements shall be specified by a Cabinet Order.

2. The organizing members set forth in Article 5 of the Supplementary Provisions of Kabushiki Kaisha Development Bank of Japan (hereinafter referred to as the “Bank Organizing Members”) may perform the acts of preparation necessary for Kabushiki Kaisha Development Bank of Japan to smoothly commence the Crisis Response Operations on the date prescribed in Article 1, Item (5) of the Supplementary Provisions hereof, such as the application for authorization set forth in Article 16, Paragraph 2 hereof which shall apply by making replacements pursuant to the provisions of the preceding Paragraph and the execution of the Agreement set forth in Article 21, Paragraph 1 hereof.

3. The competent Ministers who have received an application for authorization made by the Bank Organizing Members pursuant to the provisions of the preceding Paragraph may grant the authorization as governed by the provisions of Article 16, Paragraph 2, which shall apply by making replacements pursuant to the provisions of Paragraph 1 of this Agreement. In this case, if the Bank Organizing Member is authorized as governed by the provisions of the same Paragraph, Kabushiki Kaisha Development Bank of Japan shall be deemed to have been authorized pursuant to the provisions of the same Paragraph on the date prescribed by Article 1, Item (5) of the Supplementary Provisions hereof.

4. The Agreement executed as governed by the provisions of Article 21 hereof by the Bank Organizing Members pursuant to the provisions of Paragraph 2 of this Article shall be deemed as the Agreement executed by Kabushiki Kaisha Development Bank of Japan pursuant to the provisions of Article 21 hereof on the date prescribed in Article 1, Item (5) of the Supplementary Provisions hereof.

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Article 47: Review on Status of JFC’s Operations

1. After the establishment of JFC, the Government shall, taking into consideration the status of the enforcement of this Act, review the status of JFC’s operations, such as the operations of providing the loan of funds listed in Item (14) of Schedule I hereto pursuant to the provisions of Article 11, Paragraph 1 hereof, from the point of view that JFC has the purpose of supplementing the financial transactions implemented by ordinary financial institutions, and the Government shall, when it finds necessary, implement the required measures, such as the abolishment of operations, based on the results thereof.

2. When five (5) years have passed after the establishment of JFC, the Government shall, taking into consideration the status of the enforcement of this Act, review the system related to the Designated Financial Institution and, when it finds necessary, implement the required measures based on the results thereof.

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Schedule I (concerning Article 11)

(1)	A person who has the intention of conducting a business independently as well as having an appropriate business plan, with the prospect of continuing the business	Small sum of funds for business necessary to conduct the business (excluding the funds listed in Items (3) through (7) below)
(2)	A person who is to obtain an Education (meaning such education that is provided in high schools, specialized vocational training schools or universities prescribed by the School Education Act (Act No. 26 of 1947) or other equivalent educational facilities prescribed by a Cabinet Order; the same shall apply in this Item) or his/her relatives, who attains the requirements prescribed by a Cabinet Order, such as the income level	Small sum of the Funds for Education (meaning the funds necessary for the person who is to obtain the Education or his/her relatives to provide the Education)
(3)	A Person Engaged in the Life/Health-Related Businesses	Funds required to establish or maintain the facilities or equipment (including vehicles; the same shall apply in this Schedule) prescribed by a Cabinet Order (including the establishment or maintenance of facilities needed in connection with the establishment or maintenance of the said facilities or equipment) and other funds necessary to increase sanitation standards and promote modernization with respect to A Person Engaged in Life/Health-Related Businesses, which funds are prescribed by a Cabinet Order
(4)	A person employed for the living/healthcare related business engaged in by a Person Engaged in the Life/Health-Related Businesses, who satisfies the criteria prescribed by the competent Ministry Ordinance taking into consideration the number of years of employment for such living/healthcare related business	Funds required to establish the facilities or equipment necessary for such person to newly engage in a living/healthcare related business of the same type as the said living/healthcare related business
(5)	A living/healthcare trade association, living/healthcare trade small association, federation of living/healthcare trade associations or other equivalent persons, who engage in the business prescribed by a Cabinet Order, such as the production of goods	Funds required to establish or maintain the facilities or equipment necessary to engage in such business or funds necessary to engage in such business, which funds are prescribed by a Cabinet Order

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(6)	A person who conducts research to improve and advance technology relating to the living/healthcare related business	Funds required to establish or maintain the facilities or equipment necessary to conduct such researches
(7)	A person who engages in the Business of Training Barbers or Cosmetologists (meaning the establishment of training facilities for barbers or training facilities for cosmetologists after obtaining a designation pursuant to the provisions of the Barbers Act (Act No. 234 of 1947) or the Cosmetologists Act (Act No. 163 of 1957))	Funds required to maintain the training facilities for barbers or the training facilities for cosmetologists
(8)	A Person Engaged in Agriculture, Forestry and Fishery	Long-term and low-interest funds that will contribute to the sustainable and sound development of the Agriculture, Forestry and Fishery and that are listed below (limited to such funds that are difficult to procure in capital markets): a.  funds necessary to improve, develop or rehabilitate agricultural lands or pasturelands; b.  funds necessary to acquire (in the case of acquiring land, at the same time, that is needed to be used as facilities such as windbreak forests, roads, channels and reservoirs in order to enhance the agricultural use of such lands, including the acquisition of such land) agricultural lands or meadow grazing lands (including such land that is to be agricultural land or meadow grazing land; the same shall apply in c. below) aiming for the improvement of agricultural management; c.  with respect to the agricultural land or meadow grazing land, funds necessary to acquire rights other than ownership, such as rights of lease thereto, aiming for the use of and revenues therefrom, which funds are designated by the competent Ministers; d.  funds necessary to plant or grow fruit trees (with respect to the funds necessary to grow fruit trees, limited to the funds related to the funds listed in Items (1) and (5) of Schedule V);

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e.  funds necessary to plant or grow perennial plants, other than fruit trees, designated by the competent Ministers (hereinafter referred to as the “Designated Perennial Plants”) (limited to the funds related to the funds listed in Item (1) of Schedule V and, among the funds listed in Item (5) of the same Schedule, the funds related to the planting of the Designated Perennial Plants);

f.   funds necessary to purchase or breed livestock (limited to the funds related to the funds listed in Item (1) of Schedule V and, among the funds listed in Item (5) of the same Schedule, the funds related to the purchase of livestock);

g.  funds necessary in connection with the improvement of agricultural management, such as the expansion of the scale of agricultural management, rationalization of the production system, streamlining of management control and improvement of the condition of engagement in agriculture, which funds are designated by the competent Ministers;

h.  funds necessary to ensure the solid agricultural management, which funds are designated by the competent Ministers;

i.   funds necessary to implement the afforestation;

j.   funds necessary in connection with the restrictions on the logging of timber in a forest;

k.  funds necessary to improve, develop or rehabilitate paths through a forest;

l.   funds necessary to maintain forest management, which funds are designated by the competent Ministers;

m. funds necessary to acquire forests (including the land that is to be forest) or practice silviculture, such as cultivation of forest, for the improvement of forest management, which funds are designated by the competent Ministers;

n.  funds necessary to improve, develop, rehabilitate or acquire fishing port facilities;

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o.  funds necessary to remodel, build or acquire fishing boats;

p.  funds necessary to ensure the solid fishery management, which funds are designated by the competent Ministers;

q.  funds necessary in connection with the measures, such as maintenance of facilities, including fishery boats, rationalization of production system, streamlining of management control for the improvement of fishery management, which funds are designated by the competent Ministers;

r.   funds necessary in connection with the maintenance of fishing operation, such as the reduction of the number of fishing boats and suspension of fishing operation, which funds are designated by the competent Ministers;

s.   funds necessary to improve, develop or acquire salt manufacturing facilities;

t.   funds necessary to improve, develop, rehabilitate or acquire facilities for common use by a Person Engaged in Agriculture, Forestry and Fishery; or

u.  in addition to those listed in a. through t. above, funds necessary to improve, develop, rehabilitate or acquire facilities that will ensure the sustainable and sound development of the Agriculture, Forestry and Fishery (including funds related to the improvement, development, rehabilitation or acquisition of such facilities), which funds are designated by the competent Ministers

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(9)	(i) A person, other than a local government, who sets up wholesale markets to deal in agricultural, livestock or fishery products (including the collective selling spaces established in, or adjoining to, such wholesale market area that are mainly used for the operation of selling the agricultural, livestock or fishery products other than those items dealt in such wholesale markets and that are reasonably deemed to constitute such wholesale market (hereinafter referred to as the “Attached Collective Selling Space”)), (ii) a person who engages in operation of wholesale (hereinafter referred to as the “Wholesaler”) or a person who engages in the Operation of Intermediary Wholesale (meaning the operation of selling the agricultural, livestock or fishery products wholesaled by the Wholesaler of such wholesale markets in such wholesale markets, after sorting or preparing the same, at stores established by a person who sets up wholesale markets to deal in agricultural, livestock or fishery products) (hereinafter referred to as the “Intermediary Wholesaler”) in such wholesale markets to deal in agricultural, livestock or fishery products or (iii) a juridical person with respect to which these persons are the main members or subscribers, which engages in operations equivalent to part of the operations of the Wholesaler or the Intermediary Wholesaler as such members or subscribers in order to improve the operations of such wholesale or the Operation of Intermediary Wholesale	Long-term and low-interest funds that will contribute to securing a stable supply of food or to the sustainable and sound development of the Agriculture, Forestry and Fishery, which funds are necessary to improve, develop or acquire the facilities in such wholesale markets (including the Attached Collective Selling Space) or the facilities necessary for the operations of wholesale or the Operation of Intermediary Wholesale that are recognized to be especially necessary to ensure the rationalization of distribution of agricultural, livestock or fishery products and the steady increase of consumption (limited to the funds lent to the Small and Medium Enterprises with a redemption period of more than ten (10) years)
(10)	A person who engages in the operations of production or processing, using agricultural, livestock or fishery products for which an increased demand is recognized to be especially necessary in view of the production situation and demand and supply situation (hereinafter referred to as the “Specific Agricultural, Forestry, Livestock or Fishery Products”) as raw materials or ingredients, through which operations the Specific Agricultural, Forestry, Livestock or Fishery Products will be used for new purposes or the Specific Agricultural, Forestry, Livestock or Fishery Products of a new variety are used as raw materials to be processed, and thereby the consumption of such Specific Agricultural, Forestry, Livestock or Fishery Products is recognized to be increased	Long-term and low-interest funds that will contribute to securing a stable supply of foods or to the sustainable and sound development of the Agriculture, Forestry and Fishery, which funds are necessary to improve, develop or acquire the facilities for the production or processing of the same or to otherwise develop or adopt new purposes or breed or adopt varieties, which funds are designated by the competent Ministers (limited to the funds lent to the Small and Medium Enterprises with a redemption period of more than ten (10) years)

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  (11)   A person who engages in (i) the business of production or processing, using agricultural, livestock or fishery products produced in the Designated Area (meaning the area in which, due to adverse geographical conditions, such as landform, agricultural production conditions are unfavorable and in order to ensure the sound development of agriculture, the comprehensive development of forestry or fishery, as well as agriculture, particularly needs to be promoted, and for such purpose, processing increased amount of agricultural, forestry, livestock or fishery products that are produced in such area and rationalizing the distribution thereof or promoting the comprehensive use of agriculture, forestry and fishery resources, such as agricultural lands and forests, existing in such area is recognized to be necessary and effective, which area is designated by the competent Ministers; the same shall apply hereinafter) (hereinafter referred to as the “Agricultural, Forestry, Livestock or Fishery Products in Designated Area”) as raw materials or ingredients, or (ii) the business of sale of raw or processed Agricultural, Forestry, Livestock or Fishery Products in Designated Area, which are recognized that the promoted processing of, or the rationalized distribution of, the Agricultural, Forestry, Livestock or Fishery Products in Designated Area is ensured to contribute to the promotion of the Agriculture, Forestry and Fishery in the Designated Area through the research and development or use, exploitation of demand or rationalization of business with respect to new products or technologies (hereinafter referred to as the “Research and Development, etc. of New Products”) Long-term and low-interest funds that will contribute to securing a stable supply of foods or to the sustainable and sound development of the Agriculture, Forestry and Fishery and that are necessary to improve, develop or acquire the facilities for the production, processing or sale to conduct such Research and Development, etc. of New Products or to otherwise conduct such Research and Development, etc. of New Products, which funds are designated by the competent Ministers (limited to the funds lent to the Small and Medium Enterprises with a redemption period of more than ten (10) years)

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(12)	A person who engages in the business of production, processing or distribution of Food (meaning food and beverages other than the drugs and the quasi-drugs defined in the Pharmaceutical Affairs Act (Act No. 145 of 1960)) or livestock feed (hereinafter referred to as the “Food Production, etc.”) or a juridical person formed by such persons (including such juridical person with respect to which these persons or local governments are the main members or subscribers or contribute the majority of the amount of basic properties, for the purpose of promoting the business of the Food Production, etc.)	Long-term and low-interest funds that will contribute to securing a stable supply of foods or to the sustainable and sound development of the Agriculture, Forestry and Fishery and that are necessary to improve, develop or acquire the facilities for the Food Production, etc. (in the case such facilities are to be used for the business designated by the competent Ministries, including funds necessary for such business in connection with the improvement, development or acquisition of such facilities) or necessary to conduct research and development of, or use, advanced new technology related to the Food Production, etc. (limited to those for which special expense was incurred or through which the rights to use such new technology is acquired), which funds are designated by the competent Ministers (excluding those listed in preceding three (3) Items, limited to the funds lent to the Small and Medium Enterprises with a redemption period of more than ten (10) years)
(13)	A person who establishes, in the Designated Area, the facilities where agriculture, forestry and fishery resources, such as agricultural land and forests are used for public health, which facilities contribute to the promotion of the Agriculture, Forestry and Fishery	Long-term and low-interest funds that are necessary to improve, develop or acquire such facilities or to otherwise establish such facilities and that are difficult to be accommodated by other financial institutions, which funds are designated by the competent Ministers (limited to the funds lent to the Small and Medium Enterprises with a redemption period of more than ten (10) years)
(14)	Small and Medium Enterprises	Funds necessary to promote the business (limited to those provided by the competent Ministers as the long-term funds that are for specific Small and Medium Enterprises and that are to be lent in accordance with the purpose of important measures related to the Small and Medium Enterprises)
(15)	Credit Guarantee Corporation	Funds to be a source necessary to increase the amount of guarantee liabilities and funds necessary to facilitate the performance thereof

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Schedule II (concerning Article 11)

(1)	Performance of transactions, with respect to which the Specific Financial Institutions, etc. for General Public promise to make payment, while JFC promises to make payment in the case where any predetermined events related to the credit standing of the persons listed in the middle columns of Items (1) through (7) of Schedule I have occurred (including those with respect to which the Specific Financial Institutions, etc. for General Public promise to transfer the Specific Loan Receivables for General Public or the Specific Corporate Bonds for General Public in the case of the occurrence of such events), or similar transactions
(2)	Performance of transactions, with respect to which the Specific Financial Institutions, etc. for Agriculture, Forestry and Fishery promise to make payment, while JFC promises to make payment in the case where any predetermined events related to the credit standing of a Person Engaged in Agriculture, Forestry and Fishery have occurred (including those with respect to which the Specific Financial Institutions, etc. for Agriculture, Forestry and Fishery promise to transfer the Specific Loan Receivables for Agriculture, Forestry and Fishery or the Specific Corporate Bonds for Agriculture, Forestry and Fishery in the case of the occurrence of such events), or similar transactions
(3)	Performance of acquisition by assignment of the Specific Loan Receivables for Small and Medium Enterprises from the Specific Financial Institutions, etc. for Small and Medium Enterprises that provided a loan related to such Specific Loan Receivables for Small and Medium Enterprises and acquisition of all the Specific Corporate Bonds for Small and Medium Enterprises from the Specific Financial Institutions, etc. for Small and Medium Enterprises that acquired such Specific Corporate Bonds for Small and Medium Enterprises (limited to those newly issued by the Small and Medium Enterprises)
(4)	Provision of guarantee of the liabilities related to part of the Specific Loan Receivables for Small and Medium Enterprises and the Specific Corporate Bonds for Small and Medium Enterprises
(5)	Performance of transactions, with respect to which the Specific Financial Institutions, etc. for Small and Medium Enterprises promise to make payment, while JFC promises to make payment in the case where any predetermined events related to the credit standing of the Small and Medium Enterprises have occurred (including those with respect to which the Specific Financial Institutions, etc. for Small and Medium Enterprises promise to transfer the Specific Loan Receivables for Small and Medium Enterprises or the Specific Corporate Bonds for Small and Medium Enterprises in the case of the occurrence of such events), or similar transactions
(6)	Provision of guarantee of the liabilities related to the bond certificates underlying assets of which are the Specific Loan Receivables for Small and Medium Enterprises and the Specific Corporate Bonds for Small and Medium Enterprises (including the beneficial interests in trust thereof) and other equivalent securities prescribed by the competent Ministry Ordinance (hereinafter referred to as the “Specific Asset Backed Securities”) that are issued by the Specific Purpose Company, etc.
(7)	Performance of acquisition of the Specific Asset Backed Securities that are issued by the Specific Purpose Company, etc.
(8)	In the case where the Specific Financial Institutions, etc. for Small and Medium Enterprises establish the Specific Trust with respect to the Specific Loan Receivables for Small and Medium Enterprises and the Specific Corporate Bonds for Small and Medium Enterprises, performance of acquisition, from such Specific Financial Institutions, etc. for Small and Medium Enterprises, of (i) the beneficial interests in such Specific Trust and (ii) other equivalent beneficial interests in trust prescribed by the competent Ministry Ordinance

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(8-2)	Provision of the Guarantee of Liabilities (including any act to assume liabilities which is equivalent to the guarantee of liabilities related to the provision of loans, by financial institutions prescribed by the competent Ministry Ordinance and other juridical persons prescribed by the competent Ministry Ordinance, to the Specific Purpose Company, etc. and the Trust Company, etc. (such provision of loans being limited to the provision of (i) loans, to the Specific Purpose Company, etc., of the funds necessary for such Specific Purpose Company, etc. to perform any acquisition of the Specific Accounts Receivables, etc. and the beneficial interests in trust thereof by assignment from the Small and Medium Enterprises and (ii) loans, to the Trust Company, etc., of the funds necessary for such Trust Company, etc. to perform any acceptance of the trust established by the Small and Medium Enterprises with respect to the Specific Accounts Receivables, etc.)
(8-3)	Provision of (i) loans, to the Specific Purpose Company, etc., of the funds necessary for such Specific Purpose Company, etc. to perform any acquisition of the Specific Accounts Receivables, etc. and the beneficial interests in trust thereof by assignment from the Small and Medium Enterprises and (ii) loans, to the Trust Company, etc., of the funds necessary for such Trust Company, etc. to perform any acceptance of the trust established by the Small and Medium Enterprises with respect to the Specific Accounts Receivables, etc.
(9)	Operations closely associated with the operations listed in each of the preceding Items or the operations of provision of a loan of the funds listed in the rightmost columns of Items (1) through (14) of Schedule I, which are listed below: (i)     Assignment of all or part of the Specific Trust with respect to money and the beneficial interests in such Specific Trust; (ii)    (x) Acquisition of the Preferred Shares (meaning the shares with respect to which no event of exercise of the voting rights exists at the time of issuance thereof and which carries preferable rights above those granted by common shares in terms of distribution of surplus and division of the remaining assets) and the Preferred Equity Investment (meaning the preferred equity investment defined in Article 2, Paragraph 5 of the Act Concerning Securitization of Assets (Act No. 105 of 1998)) of the Specific Purpose Company, etc. and (y) contribution to the General Incorporated Associations; and (iii)    Loan to the Trust Company, etc. and the Specific Purpose Company, etc.

Notes: The terms used in this Schedule shall have the meanings defined as follows:

(1) “Specific Financial Institutions, etc. for General Public” means the juridical persons, such as financial institutions, that are engaged in the loan to the persons listed in the middle columns of Items (1) through (7) of Schedule I of the funds listed in the corresponding rightmost columns of such Items, respectively, or the acquisition of corporate bonds issued by the persons listed in the middle columns of Items (1), (3), (4), (6) and (7) of the same Schedule in order to procure the funds listed in the corresponding rightmost columns of such Items, respectively (excluding the short-term corporate bonds provided in Article 66, Item (1) of the Act on Transfer Bonds, Shares, etc.; the same shall apply in (3), (4), (6), (7) and (9)), which are prescribed by the competent Ministry Ordinance.

(2) “Specific Loan Receivables for General Public” means the loan receivables related to the loan to be made by the Specific Financial Institutions, etc. for General Public to the persons listed in the middle columns of Items (1) through (7) of Schedule I of the funds listed in the corresponding rightmost columns of such items, respectively.

(3) “Specific Corporate Bonds for General Public” means the corporate bonds to be newly issued by the persons listed in the middle columns of Items (1), (3), (4), (6) and (7) of Schedule I in order for them to procure the funds listed in the corresponding rightmost columns of such Items, respectively, which are to be acquired by the Specific Financial Institutions, etc. for General Public by certain measures, such as acquisition through subscription.

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(4) “Specific Financial Institutions, etc. for Agriculture, Forestry and Fishery” means the juridical persons, such as financial institutions, engaged in the loan to a Person Engaged in Agriculture, Forestry and Fishery or the acquisition of corporate bonds issued by a Person Engaged in Agriculture, Forestry and Fishery, which are prescribed by the competent Ministry Ordinance.

(5) “Specific Loan Receivables for Agriculture, Forestry and Fishery” means the loan receivables related to the loan to be made by the Specific Financial Institutions, etc. for Agriculture, Forestry and Fishery to a Person Engaged in Agriculture, Forestry and Fishery.

(6) “Specific Corporate Bonds for Agriculture, Forestry and Fishery” means the corporate bonds to be newly issued by a Person Engaged in Agriculture, Forestry and Fishery, which are to be acquired by the Specific Financial Institutions, etc. for Agriculture, Forestry and Fishery by certain measures, such as acquisition through subscription.

(7) “Specific Financial Institutions, etc. for Small and Medium Enterprises” means the juridical persons, such as financial institutions, engaged in the loan to the Small and Medium Enterprises or the acquisition of corporate bonds issued by the Small and Medium Enterprises, which are prescribed by the competent Ministry Ordinance.

(8) “Specific Loan Receivables for Small and Medium Enterprises” means the loan receivables related to provision of a loan of the long-term funds to the Small and Medium Enterprises necessary for the promotion of their businesses that are made by the Specific Financial Institutions, etc. for Small and Medium Enterprises.

(9) “Specific Corporate Bonds for Small and Medium Enterprises” means the corporate bonds issued by the Small and Medium Enterprises in order to procure long-term funds necessary for the promotion of their businesses, which have been acquired by the Specific Financial Institutions, etc. for Small and Medium Enterprises by certain measures, such as acquisition through subscription.

(10) “Specific Purpose Company, etc.” means the specific purpose company (tokutei mokuteki kaisha) defined in Article 2, Paragraph 3 of the Act Concerning Securitization of Assets and the juridical persons that conduct the actions similar to the securitization of assets defined in Paragraph 2 of the same Article as prescribed by the competent Ministry Ordinance.

(11) “Trust Company, etc.” means the trust companies defined in Article 2, Paragraph 2 of the Trust Business Act, the foreign trust companies defined in Paragraph 5 of the same Article or the financial institutions which have obtained the authorization set forth in Article 1, Paragraph 1 of the Act Concerning Additional Operation of Trust Business by a Financial Institution.

(12) “Specific Trust” means the trust established by the methods listed in Article 3, Item (1) of the Trust Act (limited to those established, in a manner of executing a trust agreement set forth in the same Item with the Trust Company, etc.), the trust established by the methods listed in Item (3) of the same Article or any equivalent actions.

(13) “Specific Accounts Receivables, etc.” means the monetary claims acquired by the Small and Medium Enterprises as a result of their businesses, such as the accounts receivables from the enterprises that are counterparties to the transactions of such Small and Medium Enterprises, as prescribed by the competent Ministry Ordinance.

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Remarks:

(1) The operations listed in Items (1), (2) and (5) may be performed, as prescribed by the competent Ministry Ordinance, respectively, only in the case where, JFC pays money, while when any predetermined events related to the credit standing of the persons listed in the middle columns of Items (1) through (7) of Schedule I, a Person Engaged in Agriculture, Forestry and Fishery or the Small and Medium Enterprises have occurred, the transactions with respect to which any person other than the Specific Financial Institutions, etc. for General Public set forth in Item (1), the Specific Financial Institutions, etc. for Agriculture, Forestry and Fishery set forth in Item (2) or the Specific Financial Institutions, etc. for Small and Medium Enterprises set forth in Item (5), which respectively promised to conduct transactions related to the relevant operations promises to make payment (including the transactions with respect to which JFC promises to assign (i) the Specific Loan Receivables for General Public or the Specific Corporate Bonds for General Public, (ii) the Specific Loan Receivables for Agriculture, Forestry and Fishery or the Specific Corporate Bonds for Agriculture, Forestry and Fishery or (iii) the Specific Loan Receivables for Small and Medium Enterprises or the Specific Corporate Bonds for Small and Medium Enterprises, upon the occurrence of the relevant events) or equivalent transactions are conducted.

(2) The operations listed in Item (3) may be performed only in any of the following cases:

a. where the Specific Trust is established with respect to the Specific Loan Receivables for Small and Medium Enterprises and the Specific Corporate Bonds for Small and Medium Enterprises set forth in Item (3), and all or part of the beneficial interests in such Specific Trust are assigned; or

b. where the Specific Loan Receivables for Small and Medium Enterprises and the Specific Corporate Bonds for Small and Medium Enterprises set forth in Item (3) are assigned to the Specific Purpose Company, etc.

(3) The operations listed in Item (4) may be performed only in any of the following cases:

a. where, in providing a loan related to the Specific Loan Receivables for Small and Medium Enterprises set forth in Item (4) or in acquiring the Specific Corporate Bonds for Small and Medium Enterprises set forth in the same Item, the Specific Financial Institutions, etc. for Small and Medium Enterprises establish the Specific Trust with respect to such Specific Loan Receivables for Small and Medium Enterprises and such Specific Corporate Bonds for Small and Medium Enterprises and assign all or part of the beneficial interests in such Specific Trust;

b. where, in providing a loan related to the Specific Loan Receivables for Small and Medium Enterprises set forth in Item (4) or in acquiring the Specific Corporate Bonds for Small and Medium Enterprises set forth in the same Item, the Specific Financial Institutions, etc. for Small and Medium Enterprises assign such Specific Loan Receivables for Small and Medium Enterprises and such Specific Corporate Bonds for Small and Medium Enterprises to the Specific Purpose Company, etc.; and

c. where, in providing a loan related to the Specific Loan Receivables for Small and Medium Enterprises set forth in Item (4) or in acquiring the Specific Corporate Bonds for Small and Medium Enterprises set forth in the same Item, the Specific Financial Institutions, etc. for Small and Medium Enterprises conduct the transactions with respect to which the Specific Financial Institutions, etc. for Small and Medium Enterprises promise to make payment, while a counterparty promises to make payment upon the occurrence of predetermined events related to the credit standing of the Small and Medium Enterprises (including the transactions with respect to which the Specific Financial Institutions, etc. for Small and Medium Enterprises promises to assign the Specific Loan Receivables for Small and Medium Enterprises or the Specific Corporate Bonds for Small and Medium Enterprises, upon the occurrence of the relevant events) or similar transactions.

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Schedule III (concerning Article 11)

(1)	The loan of funds necessary for the Export of Equipment, etc., the acquisition by assignment of loan receivables related to such funds, the Guarantee, etc. of Liabilities related to such funds or the acquisition of the Public/Corporate Bonds, etc. issued in order to procure such funds by certain measures, such as acquisition through subscription
(2)	The loan of funds necessary to ensure the reliable and timely Import of Important Goods, etc., the acquisition by assignment of loan receivables related to such funds, the Guarantee, etc. of Liabilities related to such funds or the acquisition of the Public/Corporate Bonds, etc. to be issued in order to procure such funds by certain measures, such as acquisition through subscription
(3)	The loan of funds (excluding short-term funds) to be used directly or indirectly for the business which the Juridical Persons, etc. of Japan, Foreign Governments, etc. or Foreign Juridical Persons, etc. Invested in conduct outside Japan, the acquisition by assignment of loan receivables related to such funds, the Guarantee, etc. of Liabilities related to such funds, in the case where the Juridical Persons, etc. of Japan, Foreign Juridical Persons, etc. Invested in, Foreign Financial Institutions, etc. or Foreign Governments, etc. conduct the Guarantee, etc. of Liabilities to the Juridical Persons, etc. of foreign countries with respect to such funds, the Guarantee, etc. of Liabilities related to such Guarantee, etc. of Liabilities, or the acquisition of the Public/Corporate Bonds, etc. to be issued in order to procure such funds by certain measures, such as acquisition through subscription
(4)	(i) The loan to the Foreign Governments, etc., Foreign Financial Institutions, etc. or international organizations, such as The International Monetary Fund, of long-term funds required for their overseas business or the import of goods or introduction of technologies by the foreign country concerned, or funds required to attain the international balance of payments or achieve the stability of the currency of the foreign country concerned, (ii) the acquisition by assignment of loan receivables related to such funds or the Guarantee, etc. of Liabilities related to such funds or (iii) the acquisition of the Public/Corporate Bonds, etc. issued in order to procure such funds by certain measures, such as acquisition through subscription
(5)	When it is found remarkably difficult for a foreign government or foreign resident to conduct overseas transactions, such as import by reason of the international balance of payments of the foreign country concerned, and it is found urgently necessary, the loan to the governments, governmental agencies or banks of the foreign country concerned of the short-term funds necessary to facilitate overseas transactions, such as import, until The International Monetary Fund, etc. (meaning international organizations, such as The International Monetary Fund, or governments, governmental agencies or banks of more than two (2) countries other than that foreign country concerned; the same shall apply hereinafter) provides funds to assist the development of the economy of the foreign country concerned (hereinafter referred to as the “Funds for Economic Assistance”)
(6)	The provision of contributions to persons who are carrying on business outside Japan (including those Juridical Persons, etc. of Japan whose sole purpose is to make overseas investments and who make contributions to those carrying on the aforesaid business) to contribute funds required for their business
(7)	The carrying out of the necessary studies related to the operations listed in each of the preceding Items

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Notes: The terms used in this Schedule shall have the meanings assigned as follows:

(1) “Export of Equipment, etc.” means the export of equipment (including aircraft, ships and rolling stock; the same shall apply in Note (5) below) and the parts thereof and accessories thereto produced in Japan and other goods produced in Japan, the export of which is recognized to make a remarkable contribution to the development or securement of Japan’s export or import markets, or the provision of the technologies which are recognized to contribute to the development or securement of Japan’s export or import markets or to the promotion of Japan’s economic interchange with foreign countries.

(2) “Guarantee, etc. of Liabilities” means the guarantee of liabilities (including any act to assume liabilities which is equivalent to the guarantee of liabilities, only if the liabilities have a guarantee period of more than one (1) year) and the transactions with respect to which a party promises to make payment, while JFC promises to make payment in the case any event related to the credit standing of the persons predetermined by the parties has occurred (including those with respect to which either party promises to transfer monetary claims, such as loan receivables and Public/Corporate Bonds, etc., upon the occurrence of such event) or similar transactions.

(3) “Public/Corporate Bonds, etc.” means (i) public bonds, corporate bonds or any equivalent bond certificates or (ii) beneficial interests in trust.

(4) “Juridical Persons, etc.” means associations, such as juridical persons, or individuals.

(5) “Import of Important Goods, etc.” means the import or introduction of goods (including equipment) or technologies, which are essential for the sound development of Japan’s trade relations with foreign countries or the national economy.

(6) “Foreign Governments, etc.” means foreign governments, governmental agencies or local governments.

(7) “Foreign Juridical Persons, etc. Invested in” means the Juridical Persons, etc. of foreign countries (including the Juridical Persons, etc. of foreign countries having a continuous economic relationship, such as the supply of raw materials or the dispatching of officers, with the Juridical Persons, etc. of Japan) who are related to the capital contributions to the Juridical Persons, etc. of Japan.

(8) “Foreign Financial Institutions, etc.” means financial institutions, such as foreign banks, and other foreign juridical persons, provided by the competent Minister.

(9) “Co-financing” means the loan of funds by Banks, etc. (meaning banks as defined in the Banking Act, long-term credit banks as defined in the Long-Term Credit Bank Act and other financial institutions provided by a Cabinet Order; the same shall apply hereinafter), concurrently with JFC.

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Remarks:

(1) Among the operations listed in Item (1), those which are related to the export destined for any area other than developing overseas areas (referred to as the “Developing Areas” in (8) and (13) below) may be conducted only when necessary countermeasures are taken in accordance with multilateral arrangements in the case where the governments, governmental agencies or local governments of the foreign countries, in which exporters conduct the export destined for the said area, provide credit grants, insurance underwriting or interest supplements with more favorable conditions than usual in order to promote the export from such foreign countries.

(2) The operations listed in Item (1) may be conducted only with respect to the funds for persons other than the Juridical Persons, etc. of Japan.

(3) Among the operations listed in Items (1) through (4), the Guarantee, etc. of Liabilities to any person other than the Juridical Persons, etc. of Japan (excluding those related to the Public/Corporate Bonds, etc.) may be conducted only if the Banks, etc., Foreign Financial Institutions, etc. or Foreign Governments, etc. provide a loan of such funds (including the case in which the loan receivables related to such loan are assigned to the persons provided by the competent Minister) or provide the Guarantee, etc. of Liabilities related to the Guarantee, etc. of Liabilities set forth in Item (3).

(4) Among the operations listed in Items (1) through (4), those listed below may be conducted only when the loan thereof or the loan related to the loan receivables to be assigned is the Co-financing; provided, however, that this shall not apply, with respect to those listed under a. below, in the case where it is recognized that it is remarkably difficult for the Banks, etc. to provide a loan of funds together with JFC and the loan from JFC is urgently necessary to attain the purpose of such loan, and with respect to those listed under b. below, in the case where the loan receivables to the Foreign Juridical Persons, etc. Invested in with a redemption period of more than one (1) year are acquired by assignment within the period provided by the competent Minister for the purpose of assigning the same to the Specific Purpose Company, etc. (meaning the Specific Purpose Company, etc. defined in Note (10) of Schedule II; the same shall apply in (5) below) or for the purpose of establishing the Specific Trust (meaning the Specific Trust defined in Note (12) of the same Schedule; the same shall apply in (5) below), with respect to the same, in the Trust Company, etc. (meaning the Trust Company, etc. defined in Note (11) of the same Schedule; the same shall apply in (5) below) and assigning all or part of the beneficial interest in such Specific Trust:

a. loan of funds listed in Items (1) through (3) made to the Juridical Persons, etc. of Japan; or

b. acquisition by assignment of the loan receivables listed in Items (1) through (4).

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(5) Among the operations listed in Items (1) through (4), the Guarantee, etc. of Liabilities (limited to that related to the Public/Corporate Bonds, etc.) and the acquisition of the Public/Corporate Bonds, etc. may be conducted only in any of the following cases (with respect to the operations listed in Items (1) through (3) above, cases set forth in b. through f. below shall apply):

a. where part of the Public/Corporate Bonds, etc. (limited to those with a redemption period of more than one (1) year; the same shall apply in b. and c. below) that were issued by the Foreign Financial Institutions, etc., the Foreign Governments, etc. or international organizations, such as The International Monetary Fund, are acquired (excluding the case listed in b. below);

b. where the Public/Corporate Bonds, etc. are acquired and then such Public/Corporate Bonds, etc. are assigned to the Specific Purpose Company, etc. within the period provided by the competent Minister or where the Specific Trust is established to the Trust Company, etc. with respect to the Public/Corporate Bonds, etc. and then all or part of beneficial interests in such Specific Trust is assigned;

c. where the Public/Corporate Bonds, etc. to be issued by the Specific Purpose Company, etc. or the Trust Company, etc. underlying assets of which are loan receivables or the Public/Corporate Bonds, etc. are acquired;

d. where the Guarantee, etc. of Liabilities relating to the Public/Corporate Bonds, etc. to be issued by the Foreign Juridical Persons, etc. Invested in, the Foreign Financial Institutions, etc., the Foreign Governments, etc. or international organizations, such as The International Monetary Fund, is performed;

e. when the Specific Purpose Company, etc. or the Trust Company, etc. issues the Public/Corporate Bonds, etc. underlying assets of which are loan receivables or the Public/Corporate Bonds, etc., in the case where the Guarantee, etc. of Liabilities related to such loan receivables or Public/Corporate Bonds, etc., which constitute such underlying assets, or the Public/Corporate Bonds, etc. to be issued by the Specific Purpose Company, etc. or the Trust Company, etc. is performed (excluding the Guarantee, etc. of Liabilities related to the Public/Corporate Bonds, etc. to be issued by the Banks, etc.); or

f. when the Specific Purpose Company, etc. issues the Public/Corporate Bonds, etc. underlying assets of which are loan receivables or the Public/Corporate Bonds, etc., in the case where the Guarantee, etc. of Liabilities is performed related to the borrowing of funds by the Specific Purpose Company, etc. for the purpose of acquiring by assignment, or acquiring, such loan receivables or Public/Corporate Bonds, etc., which constitute such underlying assets.

(6) The operations listed in Item (2) (excluding those conducted in order to promote overseas development and securement of resources important for Japan) may be conducted only with respect to the Guarantee, etc. of Liabilities related to the funds listed below:

a. funds necessary to import the products, such as aircraft, provided by the competent Minister, with respect to which the products produced in Japan are not sufficient to replace and the import to Japan is essential; or

b. funds necessary to introduce such technologies provided by the competent Minister, with respect to which the technologies of Japan are not sufficient to replace and the introduction to Japan is essential.

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(7) Among the operations listed in Item (3), the operations of provision of the loan of funds necessary for the overseas business to be conducted by the Juridical Persons, etc. of Japan may be conducted only if such loan is provided directly to such Juridical Persons, etc.

(8) The operations listed in Item (3) (excluding those conducted in order to promote overseas development and securement of resources important for Japan) may be conducted only with respect to the business to be conducted in the Developing Areas.

(9) Among the operations listed in Item (3) (excluding those conducted in order to promote overseas development and securement of resources important for Japan), loans to the Juridical Persons, etc. of Japan may be conducted only with respect to the Small and Medium Enterprises or medium enterprises provided by the competent Minister.

(10) The loan to the governments, governmental agencies or banks of foreign countries listed in Item (5) may be conducted by obtaining the authorization of the competent Minister only when the provision of the Funds for Economic Assistance from The International Monetary Fund, etc. is expected to be certain and any of the following case occurs:

a. where, by appropriating all or part of the Funds for Economic Assistance from The International Monetary Fund, etc. (excluding JFC) for the redemption of the funds related to the loan, the redemption is expected to be secured

b. where adequate underlying assets are secured for the loan.

(11) The operations listed in Item (7) may be conducted only if they are the minimum necessary to perform the operations listed in Items (1) through (6) smoothly and effectively.

(12) Notwithstanding the provisions of (2) or (9) above, all or part of the operations listed below may be conducted in the case where the execution of the export or overseas business of the Juridical Persons, etc. of Japan has become remarkably difficult due to disruptions to international financial order when the competent Minister determines that the exceptions of operations of JFC are necessary in order to deal therewith:

a. among the operations listed in Item (1), those relating to the funds provided to the Juridical Persons, etc. of Japan; or

b. among the operations listed in Item (3), a loan to persons other than those provided by the competent Minister set forth in (9) above.

(13) Notwithstanding the provisions of (8) above, with respect to the business in any area other than the Developing Areas, when it is recognized especially necessary in order to promote the policies of the Government concerning the maintenance or improvement of the international competitiveness of Japanese industries, the operations related to such business among the operations listed in Item (3) may be conducted as prescribed by a Cabinet Order.

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Schedule IV (concerning Article 12)

Type of Loans;	Interest Rate (Annual)	Redemption Period (Year)	Grace Period (Year)
(1)    Funds listed in Item (8) of Schedule I:
1.       funds necessary to improve, develop or rehabilitate agricultural lands or pasturelands	7%	25	10
2.       funds necessary to plant or grow fruit trees	8%	25	10
3.       funds necessary to ensure the solid agricultural management, which funds are designated by the competent Ministers	5%	20	3
4.       funds necessary to implement the afforestation	7%	35	20
5.       funds necessary in connection with the restrictions on the logging of timber in a forest	5%	30	30
6.       funds necessary to improve, develop or rehabilitate paths through a forest	8%	20	3
7.       funds necessary to maintain forest management, which funds are designated by the competent Ministers	5.5%	20	20
8.       funds necessary to improve, develop, rehabilitate or acquire fishing port facilities	7%	20	3
9.       funds necessary to remodel, build or acquire fishing boats	8.5%	18	3
10.     funds necessary to ensure the solid fishery management, which funds are designated by the competent Ministers	5.5%	23	3
11.     funds necessary to improve, develop or acquire salt manufacturing facilities	8.5%	20	5
12.     funds necessary to improve, develop, rehabilitate or acquire facilities for common use by a Person Engaged in Agriculture, Forestry and Fishery	8.5%	30	8
13.     in addition to those listed in 1. through 12. above, funds necessary to improve, develop, rehabilitate or acquire facilities that will ensure the sustainable and sound development of the Agriculture, Forestry and Fishery (including funds related to the improvement, development, rehabilitation or acquisition of such facilities), which funds are designated by the competent Ministers	8.5%	25	8
(2)    Funds listed in the rightmost column of Item (9) of Schedule I	8.5%	25	5
(3)    Funds listed in the rightmost columns of Items (10) and (11) of Schedule I	8.5%	15	3
(4)    Funds listed in the rightmost column of Item (12) of Schedule I	9.5%	15	3
(5)    Funds listed in the rightmost column of Item (13)	8.5%	15	3

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Schedule V (concerning Article 12)

Type of Loans	Interest Rate (Annual)	Redemption Period (Year)	Grace Period (Year)
(1)    Funds listed below necessary to comprehensively and systematically ensure the improvement of agricultural management, as a unit, such as the expansion of the scale of agricultural management, rationalization of the production system, streamlining of management control and improvement of the condition of engagement in agriculture, in order to develop an efficient and stable agricultural management, which funds are those listed in the rightmost columns of a. through c., g., h. or u. of Item (8) in Schedule I or those necessary to plant or grow fruit trees or the Designated Perennial Plants or to purchase or breed livestock:
1.       The funds in the case where the improvement of agricultural management related to such funds are carried out in accordance with the agricultural management improvement plan recognized as prescribed in Article 12, Paragraph 1 of the Act Concerning Promotion of Strengthening of Agricultural Management Base, the management improvement plan recognized as prescribed in Article 2-5 of the Act Concerning Promotion of Production of Cows for Dairy and Beef (Act No. 182 of 1954) or the fruit farm management plan recognized as prescribed in Article 3, Paragraph 1 of the Act on Special Measures Concerning Promotion of Fruit and Agriculture Industry (Act No. 15 of 1961)	3.5%	25	10
2.       Funds other than those listed in 1. above, which are designated by the competent Ministers	5% (With respect to the funds listed in the rightmost column of b. of Item (8) in Schedule I, annual 3.5 %)	25	3 (With respect to the funds necessary to plant or grow fruit trees, 10 years)

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Type of Loans	Interest Rate (Annual)	Redemption Period (Year)	Grace Period (Year)
(2)    Funds listed in the rightmost column of t. or u. of Item (8) in Schedule I and below necessary to comprehensively and systematically conduct the business in a certain area necessary to implement the structural improvement of the forestry industry, which funds are designated by the competent Ministers:
1.       Funds other than those listed in 2. below	3.5 % (With respect to the funds in the case where the amount required for the business related to such funds is less than the amount specified by the competent Ministers, annual 5%)	20	3
2.       Funds in the case where the business related to such funds are conducted by receiving a subsidy from the Government of Japan	6.5% (With respect to the funds listed in the rightmost column of t. of Item (8) in Schedule I, annual 7.5 %)	20	3

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Type of Loans	Interest Rate (Annual)	Redemption Period (Year)	Grace Period (Year)
(3)    Funds listed below necessary to acquire forests (including the land that is to be forest; the same shall apply in 1. below) or practice silviculture, such as cultivation of forests, for the improvement of forest management, which funds are designated by the competent Ministers or the funds listed in the rightmost column of u. of Item (8) in Schedule I and below which are necessary for the improvement of forest management during the period of silviculture, either of which funds designated by the competent Ministers:
1.       Funds related to the acquisition of forests	3.5% (With respect to the funds provided to any person other than those conforming to the requirements specified by the competent Ministers related to the implementation of the forest operation (shinrin segyo), annual 5%)	25	25
2.       Funds related to the silviculture, such as cultivation of forests	5%	20	20
3.       Funds listed in the rightmost column of u. of Item (8) in Schedule I	6.5%	15	3

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Type of Loans	Interest Rate (Annual)	Redemption Period (Year)	Grace Period (Year)
(4)    Funds listed in the rightmost columns of o., q., r., t. or u. of Item (8) in Schedule I and below falling under the funds set forth in each Item of Article 9 of the Act on Special Measures Concerning Improvement and Reconstruction and Readjustment of Fishery Industry (Act No. 43 of 1976), which funds are designated by the competent Ministers:
1.       Funds related to the remodeling, building or acquisition of fishing boats (excluding those listed in 3. below)	3.5%	18	3
2.       Funds related to the maintenance of fishing operation, such as the reduction of the number of fishing boats and suspension of fishing operation	5%	15	5
3.       Funds related to the improvement, development or acquisition of facilities for common use by persons engaged in fishery	6.5%	18	3
4.       Funds other than those listed in 1. through 3. above	5%	18	3
(5)    Funds listed in the o., t. or u. of Item (8) of Schedule I and below falling under the funds set forth in Article 17 of the Act Concerning Development of Mountain Villages (Act No. 15 of 2000) or Article 26 of the Act on Special Measures Concerning Promotion of Self-Reliance of Depopulated Areas (Act No. 64 of 1965) or the funds necessary to plant or grow fruit trees, to plant the Designated Perennial Plants or to purchase livestock, which funds are designated by the competent Ministers:
1.       Funds other than those listed in 2 below	5% (During the grace period, annual 4.5%)	25	8
2.       Funds in the case where the business related to such funds are conducted by receiving a subsidy from the Government of Japan	6.5% (With respect to the funds listed in the rightmost column of t. of Item (8) in Schedule I, annual 7.5 %)	25	8

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This English version of the Law has been prepared purely for information purposes, and should not be considered as an official translation of the Japan Finance Corporation or any authorities of Japanese Government.

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EX-99.7

Exhibit 7

CERTIFICATE

I, Kai Hoshino, Attorney-at-law, do hereby certify that attached hereto is a true and correct English translation of the Japan Finance Corporation Law (Law No. 57 of 2007), as amended, and that such Law is in full force and effect as of the date hereof.

IN WITNESS WHEREOF, I have hereunto set my hand as of this 7th day of September, 2011.

/s/ Kai Hoshino

Kai Hoshino

Attorney-at-law