The scandal-hit Japanese government-backed Shoko Chukin Bank said Wednesday that an internal probe had revealed the lender had issued dodgy loans to 265 billion yen (2.3 billion U.S. dollars).
The bank's President Kenyu Adachi told a press briefing that he would step down "at an appropriate time" as the bank's chief to take responsibility for the wide-reaching scandal.
The scandal also includes more than 400 employees of Shoko Chukin's Japan-based offices being involved in 4,609 counts of malpractice.
The malpractice included the fabricating of documentation so that loans could be made to small and medium-sized companies.
The bank was found to have approved low-interest loans to firms that did not fulfill the criteria to provide them with aid in the wake of natural or financial disasters.
The scheme, which was put into place by the government, was found to have been abused by Shoko Chukin Bank since 2008, with such financing accounting for more than 30 percent of the bank's outstanding loans.
The Ministry of Economy, Trade and Industry, on Wednesday, issued its second business improvement order since May to the scandal-mired bank.
Minister of Economy, Trade and Industry Hiroshige Seko and other senior officials at the ministry will return part or all of their salaries for the past two months to account for their lapses in overseeing the bank, Kyodo News reported.
The bank's past and present executives, including its president, who allowed the improprieties to happen will also be fined.