The Japan Business Federation has decided to punish scandal-tainted Olympus Corp and Daio Paper Corp on December 21, the Nikkei business daily said.

The powerful business lobby, also known as Keidanren, may demand the resignation of any officials who currently hold organizational positions and bar them from taking part in member activities for the foreseeable future, the paper said.

The punishments reflect the organization's view that the scandals have seriously eroded investor trust in Japanese companies and capital markets, the Nikkei said.

The federation would take the decision at a meeting of a committee comprising its Chairman Hiromasa Yonekura, vice-chairmen and others, the paper reported.

While the top management played a key role in the cover-up of investment losses at Olympus, former chairman of Daio Paper Mototaka Ikawa was arrested for taking out personal loans from group companies, the Nikkei said.

(Reporting by Sunayan Bhattacharjee in Bangalore; Editing by Sriraj Kalluvila)