TOKYO, April 16 (Reuters) - Yields on benchmark 10-year Japanese government bonds were flat on Friday, despite an overnight dive in U.S. Treasury yields, as banks held off buying due to a new Bank of Japan incentive to lend to pandemic-hit small firms, traders said. The central bank’s scheme, from which banks are likely to be able to earn higher interest rates, took effect on Friday. The 10-year JGB yield was unchanged at 0.085%, while the 20-year JGB yield fell 0.5 basis point to 0.450%. The 30-year JGB yield was flat at 0.650% and the two-year JGB yield was also unchanged at minus 0.135%. The five-year yield fell 0.5 basis point to minus 0.105%. The 40-year JGB yield fell 0.5 basis point to 0.680%. Benchmark 10-year JGB futures rose 0.02 basis point to 151.36, with a trading volume of 19,303 lots. (Reporting by Tokyo markets team; Editing by Simon Cameron-Moore)