TOKYO - While Japan's Ministry of Finance is moving to end controls on the interest rates banks pay, it may take more time for the public to see deposits with variable rates, banking sources here said.

"Trust banks are strongly opposing longer-term, variable-rate deposits, which commercial banks are willing to introduce next June," said an executive at one of the long-term credit banks.

"Facing such a strong opposition and given the currently poor environment in the financial industry, the ministry is likely to delay allowing commercial banks to introduce such deposits."

Deregulation Timetable

The Finance Ministry has already pledged to fully deregulate interest rates on time deposits in 1993 and the rates on other types of small accounts in 1994.

The decontrol will allow each bank to set its own fixed interest rates, but it does not mean that periodically adjustable rates will be offered.

Commercial bankers say that deregulation of time deposit rates should be accompanied by the freedom to design the structure of deposits, but trust bankers fear that new variable-rate deposits will threaten their sources of funding.

Long-term Deposits Opposed

Hiroshi Hayasaki, president of the Trust Company Association of Japan, said last month that he is against commercial banks' introduction of time deposits of longer than three years, as well as variable-rate deposits.

"Japan has set the framework of financial system reform, but it must be made without jeopardizing the business of existing financial institutions," said one trust bank official.

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