March 3 (Bloomberg) -- Bank of Japan Governor Toshihiko Fukui said banks should offer services to meet the needs of companies and households to bolster competitiveness.

``From April, the government ends its limitless guarantee on bank deposits,'' Fukui said in a speech from Tokyo via video to a forum on the southern Japanese island of Okinawa. ``Financial institutions should survive by using various financial technologies.''

Fukui also said companies and individuals will assess after April 1 the credibility of financial institutions more strictly and check their services more closely.

``If financial institutions try to improve their services, Japan's financial system can provide stronger support for economic growth.''

On April 1, the government's guarantee on bank deposits will be capped at 10 million yen ($95,300) because Japanese banks have reduced bad loans, improving the health of the country's financial system.

Total bad loans at the nation's banks fell to 34.6 trillion yen as of March 31, 2004, from 52.4 trillion two years earlier, the government said on May 24 last year.

To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net

Last Updated: March 3, 2005 02:11 EST