* Bank lending rises 6.4% in September vs 6.7% in August * Major banks' lending slows as big firms pay back loans * Smaller borrowers continue to rely heavily on lending (Adds details, quotes from BOJ briefing) By Chris Gallagher and Leika Kihara TOKYO, Oct 12 - Japanese bank lending rose at a slower annual pace in September than the previous month as corporate funding strains caused by the pandemic eased mainly among big borrowers, central bank data showed on Monday. But lending by regional banks remained high as smaller firms continued to borrow heavily to meet immediate funding needs, the data showed, underscoring the lingering economic pain brought by the health crisis. "Big companies that had borrowed huge amounts of funds as a precaution around spring are now paying back some of the loans due to easing uncertainty over the pandemic," a BOJ official told a briefing. "But that's not to say conditions have improved. There are gaps among industries on how much their profits have recovered." Total bank lending rose 6.4% in September from the same month a year earlier, slower than a 6.7% gain in August, to a record 573.7 trillion yen ($5.43 trillion), Bank of Japan data showed. The pace of lending by major banks slowed to 7.3% in September from 8.0% in August. Lending by regional banks rose 5.3%, roughly unchanged from the previous month's 5.4% increase. Those by "shinkin" credit associations, which lend mostly to small firms in regional areas of Japan, rose 7.8%, the fastest pace on record, the data showed. Bank deposits rose 9.0% in September from a year earlier, the biggest increase on record, as households held back on spending and instead saved government pay-outs aimed at cushioning the blow from the pandemic, the official said. ($1 = 105.6300 yen) (Reporting by Chris Gallagher and Leika Kihara; Editing by Jacqueline Wong)
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