TOKYO (AFX-ASIA) - Hideyuki Aizawa, a senior member of the Liberal Democratic Party, said the party will propose that the government's stock-buying body expand purchases to life insurers and other companies. Aizawa was speaking to reporters after a meeting of the party's committee on measures to tackle deflation, which he heads. The government body was set up to buy banks' cross-shareholdings in companies with which they have close relations, but life insurers hold similar holdings totalling around 40 trln yen, larger than those of the banks. Many life insurance companies are in an extremely poor financial condition, Aizawa said. "We decided that bank shares held by other companies should also be purchased by the body to buy banks' cross-shareholdings," Aizawa told reporters after a meeting of the anti-deflation panel. "The extension of stock purchases requires a change in the law but we want to implement this as early as possible, by the time companies close their books for the first fiscal half in September," he said. "We decided the Resolution and Collection Corp should buy bad loans from banks of at least 2 trln yen in market value by the end of March," he added. Aizawa said the party and members of the government want to see the Bank of Japan introduce an inflation target to help further boost the economy. "We will propose to the government that the BoJ should set up an annualised 1-2 pct growth target for consumer prices and the bank should continue to provide ample liquidity towards achieving that target," he said. "Separately, we decided the BoJ should reconsider purchasing foreign bonds and exchange-traded funds as a means to increase liquidity," he added. Aizawa said a mooted injection of public funds into major banks should depend on requests for such funds from managers of banks. "A capital injection should be implemented, if needed, after the government's financial-crisis panel convenes and decides to make up for a shortfall in banks' capital-adequacy ratio, based on BIS standards," he said. "The government will buy prefered stocks from banks in that case," he said, adding: "This action has already been stipulated in the Deposit Insurance Corp law so there is no need to revise the law."