The Cabinet of Prime Minister Yukio Hatoyama decided March 30 to accept a plan to double the postal savings cap to ¥20 million, as proposed by postal reform minister Shizuka Kamei.

Prime Minister Yukio Hatoyama announced March 30 that he decided to accept a plan to double the postal savings cap to ¥20 million. KYODO PHOTO

The Cabinet also decided to raise the cap on kampo life insurance payouts to ¥25 million from ¥13 million.

"I have instructed the Cabinet to draw up a bill" centered on the plan to double the postal savings cap to ¥20 million, Hatoyama said after a Cabinet meeting on postal reform.

Attempting to soothe the fears of private-sector financial institutions, Hatoyama said the deposit ceiling will be lowered if deposits at the postal bank grow so large that they pose a threat to the private sector. He did not elaborate.

With an expected surge in deposits at the postal bank, the government will seek ways to invest the money not only in government bonds but also in revitalizing local communities and promoting growth strategies.

During the Cabinet meeting, Hatoyama ordered his ministers to compile a postal reform bill based on Kamei's plan, government officials said.

The row over postal reform grew bitter after Kamei unveiled the outline of a bill March 24 aimed at scaling back the ongoing privatization of the Japan Post group, which features a plan to double the cap on deposits per person at Japan Post Bank Co. to ¥20 million.

At a news conference March 30, Kamei said he is aiming to have the bill take effect in April next year at the latest.