My impression is that those conditions are added to the terms of the scholarship so that, in case someone is proving disruptive, it will be easy enough to get rid of them.
I have also been told by the other MEXT scholars at my school that getting the extension is largely a formality. I am applying for it now, and I have my interview for getting into my school's masters program this sunday. Not in the slightest bit worried about the whole process, if that makes you feel any better.